In a bid to promote equity investments among retail investors, the government of India has come up with the Rajiv Gandhi Equity Saving Scheme (RGESS). This scheme allows eligible taxpayers to invest in listed equities and mutual funds through a Demat account, and claim tax deductions on the investment.
If you are interested in investing in RGESS, continue reading this blog post.
What is Rajiv Gandhi Equity Saving Scheme?
The Rajiv Gandhi Equity Saving Scheme (RGESS) was introduced in 2012-2013 by the government of India. It is a tax-saving scheme open to first-time equity investors, with an annual income below Rs. 12 lakhs. Under this scheme, taxpayers can claim a deduction of up to Rs. 50,000 on their investment in equity shares or mutual funds that are RGESS-compliant. This deduction is available over and above the limit of Rs. One lakh under Section 80C of the Income Tax Act.
To be eligible for this scheme, investors must open a Demat account with a SEBI-registered broker and make their investments through this account. The investment must be made in the name of the first-time investor and can be in the form of cash, cheque, or electronic transfer.
What are the benefits of investing in RGESS?
The main benefit of investing in RGESS is that it allows taxpayers to claim a deduction on their investment, thereby reducing their taxable income. The investments made through RGESS are exempt from capital gains tax if they are held for a period of at least one year.
Another benefit of this scheme is that it encourages first-time investors to start investing in equity markets. By making equity investments more accessible and tax-efficient, RGESS aims to broaden the investor base in India.
What are the risks of investing in RGESS?
Investing in equity markets always carries some risk, as stock prices can go up or down. However, over the long term, equity investments have outperformed other asset classes such as fixed deposits and gold. Therefore, if you are a first-time investor with a long-term investment horizon, RGESS can be a good option for you.
It is important to remember that tax laws are subject to change and the benefits under RGESS may not be available in future years. Therefore, you should consult a financial advisor before making any investment decisions.
How to invest in Rajiv Gandhi Equity Saving Scheme?
If you are interested in investing in RGESS, you can do so by opening a Demat account with a SEBI-registered broker. After opening the Demat account, you can invest in any of the listed equity shares or mutual funds that are compliant with RGESS.
Before making any investments, make sure to do your own research and consult a financial advisor. This will help you make informed investment decisions and maximize your chances of success.
Rajiv Gandhi Equity Saving Scheme (RGESS) is a great way for first-time investors to get started in the equity markets. With tax deductions and exemption from the capital gains tax, RGESS makes equity investing more accessible and attractive for retail investors.
Who is eligible?
The Rajiv Gandhi Equity Saving Scheme (RGESS) is open to first-time investors with an annual income below Rs. 12 lakhs.
What is the minimum investment amount?
The minimum investment amount under RGESS is Rs. 5000. But, taxpayers can claim a deduction of up to Rs. 50,000 on their investment in equity shares or mutual funds that are RGESS-compliant.
What is the Lock-in period for Rajiv Gandhi Equity Saving Scheme?
The investors should hold the investments made under RGESS for a minimum period of one year. After this lock-in period, they are free to sell their shares or redeem their mutual fund units. However, if they do so before the completion of three years, they will not be eligible for the benefits.