tax free mutual fund details
TRANSCRIPT
" To encourage the savings of the small investors in domestic capital market”
"
RGESS Rajiv Gandhi Equity Savings Scheme or RGESS is a
new equity tax advantage savings scheme forequity investors in India.
Rajiv 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.
The Scheme not only encouragesthe flow of savings and improvesthe depth of domestic capitalmarkets, but also aims topromote an 'equity culture' inIndia.
This is also expected to widenthe retail investor base in theIndian securities market.
Basically its one of the bestinvestment in tax saving inIndia.
Example…
Let us say, you invest Rs.50,000 under RGESS.
The amount eligible for tax deduction fromyour 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% respectivelyunder this scheme.
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 listedshares and extended tax benefits to threesuccessive years.
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.
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.
Eligibility
Resident Individual
Annual Income< =Rs. 10 Lakhs
Demat Account Not Opened
No transactions in Equity or F&O
New Retail Investor
No transactions in Equity or F&O
Demat Account already Opened
Annual Income < =Rs. 10 Lakhs
Resident Individual
2nd & 3rd holder of an account can open a new account as 1st holder
Benefits The investor would get 50% deduction of the
amount invested during the year, up to amaximum investment of Rs.50,000 perfinancial year, from his/her taxable incomefor that year, for three consecutive assessmentyears.
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.
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 financialinclusivity in the country.
Continuation…
Investments are allowed to be made ininstalments in the year in which the taxclaims are filed.
Success of this scheme can lead to transferof assets from traditional savingsinstruments such as bank deposits
FDs to the capital markets, leading todiversification in retail investor portfolioand also leading to more productive"capital formation" assets.
Continuation…
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
Securities
Deduction
Form B
Act 80CCG
AssessmentBenefits
Max Invest
Subsequent Year
Conclusion
Account
Open Account
Eligible Securities
Eligible Deduction
Form B for New Investors
80CCG Act For Eligible
Assessment Year Deduction
Benefits Under Schemes
Maximum Investment
Subsequent AssessmentYearConclusion
A New Retail Investor Can Make InvestmentsA New Retail Investor Can Make InvestmentsA New Retail Investor Can Make Investments
Open Account
Eligible Securities
Eligible Deduction
Form B for New
Investors
80CCG Act For Eligible
Assessment Year
Deduction
Benefits Under
Schemes
Maximum Investment
Subsequent Assessment
Year
Conclusion
Procedure for a new retail Investor
A Better Way to Save Tax in India
Who can invest in RGESSNew retail investors with an annual gross income of less than Rs.12 Lakhs.
How much can I investThe maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.
Tax BenefitDeduction under Section 80CCG of the Income-Tax Act, 1961, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.
Lock-in Period3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.
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.
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 upthe balance. However, if you choose to sella part of your holdings from Rs 40,000,you will need to replenish it.
May you think your investment in the right way
Ekarup
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