Sunday, 10 February 2013

Rajiv Gandhi Equity Saving Scheme (RGESS)

Main features -
•New Retail investor will be eligible for tax benefit u/s 80CCG on investments upto Rs. 50,000.

Amount eligible for tax deduction is 50% of the amount invested i.e. max. Rs. 25,000 if you invest Rs. 50,000 or Rs. 15,000 if you opt to invest Rs. 30,000.

•Amount to be invested in Government specified shares, ETF's and Mutual Funds.

Holding period-3 years (Fixed lock in for 1 year and Flexible lock in for 2 years)

Eligibility conditions—

 •Your Gross Total Annual Income should be less than or equal to Rs. 10 Lakhs.

•You should not have made any transactions in Equity or Derivatives before 23.11.2012.

Only and only if you satisfy the above two conditions, you will be eligible for this one time tax deduction.


Other Important Points—

·        As RGESS is for first time investors in stock market, it is highly recommended that they follow the Mutual Fund route for investing instead of directly investing in shares. Reason is quite simple, they get a professional fund manager to look after the investment.

·        It is going to be a challenge to complete the paper work and invest into the scheme within this Financial Year. KYC compliance, Opening of Demat and investment, all requires to be done to ensure the tax deduction.

Take decision quickly to enjoy the ride in equity.                                                   

The objective of RGESS is to encourage flow of savings of small investors in stock market. Hence, if you are not eligible and know how equity helps in long term wealth creation, please encourage the young/old equity averse people to invest through this scheme. Please spread the word and let the awareness spread.

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