Golden opportunity for Indian Professionals to enter stock markets and save taxes -Rajiv Gandhi Equity Savings Scheme (RGESS)



The new Rajiv Gandhi Equity Savings Scheme (RGESS) is a good scheme which can be availed by Indian professionals, who intend enter in to world of stocks and invest in them. 

This scheme also comes with a unique tax benefit for for attracting salaried  people to it.

Government of India has launched this unique program in 2012, with an aim to attract new retail investors to the stock market.

Read on for all you wanted to know about RGESS.

What is RGSSS?

Rajiv Gandhi Equity Savings Scheme (RGESS) is the first  investment program designed for Indian people, who can save income tax when they make stock investments. This scheme is  available only for the first time investors whose yearly income is less than rupees 10 lakhs.

How much you can invest?

A maximum of Rupees 50,000 can be invested under the RGESS.

How much tax exemption can be availed?

50% of the the amount of the investment can be availed for tax exemption under section 80CCG. i.e .If we invest rupees 50000 in RGESS , 25000 can be reduced from the total yearly income. The maximum savings in this scheme is Rs. 5000 for the investors in the 20% tax bracket and Rs. 2500 for those in the 10% tax bracket.

Please note this exemption is over and above the section 80c  benefit which you currently have.

When you can withdraw money?

There is a minimum lock-in period of 3 years for the investors to withdraw the initial investment amount of this scheme. But if there is appreciation in the value of the of shares , you may sell shares corresponding to the appreciated value after 1 year period.

In which of the stocks you can invest?

You can invest  in BSE 100 and CNX 100 stocks, Maharatna, Navratna and Miniratna PSUs, and initial public offerings of some public sector companies qualify as RGESS investments.. You may also invest in mutual funds which invest on the above said stocks or in selected ETFs.

How can you invest?

You need pan card, bank account and a DEMAT account to join in this scheme. For starting an DEMAT account  and to begin the scheme you have to contact stock broking companies, Mutual fund companies and banks.

Last year mutual fund companies like HDFC, LIC Nomura, DSP Blackrock, Birla Sun Life, IDBI, and UTI had launched special RGESS schemes.

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