Rajiv Gandgi Equity Scheme : An Overview

Eligibility Criteria The deduction will be available to a ‘new retail investor’ whose gross total income for the financial year, in which investments are made under the scheme, is less than or equal to Rs 10 lakh. Any resident individual, who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the scheme, will fall under the definition of ‘new retail investor’. Any, any individual who has opened a demat account before the scheme’s notification, but has not made any transactions in the equity segment or the derivative segment till the date of notification, will be considered as ‘new retail investor’ Who can invest in RGESS?	New retail investors with an annual income of less than 10 lakhs.
How much can I invest?	The maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.
Tax Benefit	Deduction u/s 80 CCG, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.
Lock-in Period	3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.

AIM: To encourage the savings of the small investors in domestic capital market.

Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity tax advantage savings scheme for equity investors in India. The scheme got it's approval on September 21, 2012. It is exclusively for the first time retail investors in securities market.

The investors who invest up to Rs.50,000 in 'Eligible Securities' and have gross total annual income less than or equal to Rs.10 Lakhs will benefit from a new section 80CCG under the Income Tax Act, 1961 on 'Deduction in respect of investment under an equity savings scheme' has been introduced to give tax benefits.

Example:
Let us say, you invest Rs.50,000 under RGESS, the amount eligible for tax deduction from your income will be Rs.25,000. Alternatively, if you invest Rs.40,000 under RGESS, the amount eligible for tax deduction will be Rs.20,000. So you may save about Rs.2,575, Rs.5,150 for income tax slabs 10% and 20% respectively under this scheme.