Rajiv Gandhi Equity Savings Scheme (RGESS) - Section 80CCG
What is RGESS?
The Rajiv Gandhi Equity Savings Scheme (RGESS) was introduced by the Government of India to encourage retail investors to participate in the equity market and promote long-term investment in equities. Investments under RGESS are eligible for tax deductions under Section 80CCG of the Income Tax Act, 1961.
Benefits of RGESS
- Tax Deduction: Eligible investors can claim a deduction of 50% of the amount invested in RGESS, subject to a maximum investment limit of ₹50,000 per financial year.
- First-Time Investors: The scheme is designed specifically for first-time retail investors, promoting equity market participation.
- Long-Term Capital Growth: Encourages investment in equity securities, potentially offering higher returns over the long term.
Eligibility Criteria
To be eligible for tax benefits under Section 80CCG:
- The investor must be a new retail investor, meaning they should not have a demat account prior to the scheme's introduction or should have opened one but not made any transactions in equity or derivatives.
- The investor's gross annual income should not exceed ₹12 lakh.
- The investment must be made in eligible securities as specified under the scheme.
Important Points to Consider
- The maximum deduction allowed under Section 80CCG is 50% of the invested amount, with a maximum investment limit of ₹50,000.
- The lock-in period for RGESS investments is three years, with a fixed lock-in for the first year and a flexible lock-in for the subsequent two years.
- RGESS is aimed at first-time retail investors, and they should adhere to the scheme's conditions to avail of the benefits.
Note: The RGESS was discontinued in the Union Budget 2017. The information provided is for
historical reference. Investors are advised to check the latest provisions under the Income Tax Act or
consult with a tax advisor for current tax-saving options.
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