tax free equity scheme details

8/10/2019 Tax Free Equity Scheme Details

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" To encourage the savings of the small investors in domestic capital market


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RGESS Rajiv Gandhi Equity Savings Scheme or RGESS is anew equity tax advantage savings scheme forequity investors in India.

R ajiv Gandhi Equity Savings Scheme (RGESS)announced in Union Budget 2012-13 is a new equitytax advantage savings scheme for equity investorsin India.

The scheme got it's approval on September 21,2012. It is exclusively for the first time retailinvestors in securities market.


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The Scheme not only encouragesthe flow of savings and improvesthe depth of domestic capitalmarkets, but also aims topromote an 'equity culture' in

India.

This is also expected to widenthe retail investor base in theIndian securities market.

Basically its one of the bestinvestment in tax saving inIndia.


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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.

Let us say, you invest Rs.40,000 under RGESS.

The amount eligible for tax deduction will beRs.20,000.

So you may save about Rs.2,575, Rs.5,150 forincome tax slabs 10% and 20% respectively

under this scheme.


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Latest Updates

Effective 1 April 2014, investors with a grosstotal income of up to Rs.12 Lakhs can invest inRGESS, up from an earlier income limit ofRs.10 Lakhs.

Investors can park funds in MFs and listed

shares and extended tax benefits to threesuccessive years.


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How the scheme works The RGESS is only for individuals who havenot invested directly in

Equities.

including shares .

Derivatives,

* Before 23 November 2012. If you hold unitsin an equity mutual fund, you are eligible toinvest in it under the present rules.


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Continuation If you have a demat account.

But have not used it for transactions beforethe specified date,

you can avail of the RGESS benefits.Besides, only those whose gross annualincome is up to Rs 12 Lakhs can invest.


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BenefitsThe investor would get 50% deduction of theamount invested during the year, up to amaximum investment of Rs.50,000 perfinancial year, from his/her taxable incomefor that year, for three consecutive assessment

years.

It provides additional tax benefits over andabove the present tax savings schemes underthe Income Tax Act.

Gains, arising of investments in RGESS, canbe realized after a year. This is in contrast toall other tax saving instruments.


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The benefits can be availed for threeconsecutive years.

Dividend payments are tax free.

This scheme has a long run benefit ofeducating the retail investment segmentand thereby moving towards financial

inclusivity in the country.

Continuation


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Equity Shares in BSE-100 or CNX 100

Equity Shares of Maharatna, Navratna, Miniratna

Units of eligible ETFs or MFs

Eligible FPOs & NFOs

IPOs of eligible PSUs

Eligible Securities


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Securities

Deduction

Form B

Act 80CCG

AssessmentBenefits

Max Invest

Subsequent Year

Conclusion

AccountOpen AccountEligible Securities

Eligible Deduction

Form B for New Investors

80CCG Act For Eligible

Assessment Year Deduction

Benefits Under Schemes

Maximum Investment

Subsequent Assessment YearConclusion

A New Retail Investor Can Make Investments A New Retail Investor Can Make Investments A New Retail Investor Can Make Investments


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Open Account

EligibleSecurities

EligibleDeduction

Form B forNew

Investors

80CCG ActFor Eligible

Assessment Year

Deduction

BenefitsUnder

Schemes

MaximumInvestment

Subsequent Assessment

Year

Conclusion

Procedure for a newretail Investor


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A Better Way to Save Tax in India

Who can invest in RGESS New retail investors with an annual grossincome of less than Rs.12 Lakhs.

How much can I invest The maximum amount eligible for claimingbenefit under RGESS is Rs. 50,000.

Tax Benefit Deduction under Section 80CCG of theIncome-Tax Act, 1961, is available on 50% ofthe amount invested. The benefit is inaddition to deduction available u/s Sec 80C.

Lock-in Period 3 years. Fixed lock-in during first yearfollowed by a flexible lock-in for subsequenttwo years.


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Flexible lock-in period

The RGESS investment has a lock-in periodof three years. However, there is flexibilityafter the first year of investment.

This means that during the first year oflock-in period, the investor cannot sell theholdings for which he claims tax benefit.

From the second year onwards, he can sell aportion of his holdings, provided hemaintains the aggregate value in hisaccount for which benefit is claimed for thenext two years.


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For instance, if your initial investment ofRs 50,000 rises to Rs 60,000 after the endof first year of the lock-in period, you cansell Rs 10,000 worth of securities andmaintain Rs 50,000 in the account for thenext two years.

However, if the value declines to Rs40,000, you are not required to make up

the balance. However, if you choose to sella part of your holdings from Rs 40,000, you will need to replenish it.


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May you think your investment in the right way

Ekarup

Coimbatore PH:[email protected]

Chennai PH:[email protected]

Madurai PH:[email protected]

Pondicherry PH:[email protected]

For more information visit us on the web:

www.ekarup.com

www.zerobrokerageunlimitedtrading.com

tax free equity scheme details

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