Wednesday, January 23, 2013


on Wednesday, January 23, 2013

The Rajiv Gandhi Equity Savings Scheme (RGESS) is a new tax benefit scheme introduced for equity investment in select stocks, mutual funds and ETFs as declared by the Ministry of Finance.

Under this scheme, if you are a first time investor with a gross annual income less than`10 lakh,(Limit increased to 12 lakh from Fy 2013-14) then up to `50,000 of your investments in the stock market will be eligible for tax deduction under section 80-CCG.

Answer the questions to know if you are eligible to invest in stocks under the RGESS scheme:
  1. Is your gross total annual income above Rs 10 lakh?(Limit increased to 12 lakh from Fy 2013-14)
  2. Have you made any transactions in equity or derivatives before November 23, 2012?
if answer of the both of  above question  is NO then you can avail this deduction .Follow these steps to avail the deduction u/s 80CCG (RGESS)

If you are eligible, you need to undertake the following steps:
  1. Open a demat account with either NDSL or CDSL through a depository participant. A depository participant is either a broker or a bank and you can get a list of depository participants from NSE, NDSL and CDSL site.
  2. Designate the demat account as a RGESS account. If you have an existing demat account where you haven’t traded, then you should designate that account as a RGESS account. You can use the Form A for this purpose.
  3. Purchase eligible stocks through one or more transactions across the year.
  4. Claim tax benefits under Section 80 CCG when you file your Income Tax returns.
  5. The investment made under RGESS is locked in for a total period of three years. However only the first year is a fixed lock-in. In the subsequent two years, the investment is subject to a flexible lock-in. During this flexible lock-in period the investor has a freedom to book profit or alter the securities in her/his portfolio provided the value of securities in the demat account is maintained equal to the amount declared as investment under RGESS in the first year.

Eligible Securities
You can pick the below listed stocks from four categories: CNX 100, BSE 100, Maharatna and Navaratna & ETFs

1.Securities in CNX 100(list can be changed by NSE)
2. Securites in BSE 100
Coal India Limited
Indian Oil Corporation Limited
NTPC Limited
Oil & Natural Gas Corporation Limited
Steel Authority of India Limited
b)NAVRATNA Bharat Electronics Limited
Bharat Heavy Electrical Limited
Bharat Petroleum Corporation Limited
GAIL (India) Limited
Hindustan Petroleum Corporation Limited
Mahanagar Telephone Nigam Limited
National Aluminium Company Limited
NMDC Limited
Neyveli Lignite Corporation Limited
Oil India Limited
Power Finance Corporation Limited
Power Grid Corporation of India Limited
Rural Electrification Corporation Limited
Shipping Corporation of India Limited 

4..ETF(exchange traded Funds)

Birla Sun Life Nifty ETF* BSLNIFTY
Goldman Sachs Banking Index Exchange Traded Scheme BANKBEES
Goldman Sachs Nifty Exchange Traded Scheme NIFTYBEES
Goldman Sachs Nifty Junior Exchange Traded Scheme JUNIORBEES
Goldman Sachs S&P CNX Nifty Shariah Index Exchange Traded Scheme SHARIABEES
Motilal Oswal MOSt shares M50 ETF* M50
Quantum Index Fund QNIFTY
R*Shares Banking Exchange Traded Fund* RELBANK
Religare Nifty Exchange Traded Fund RELGRNIFTY

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  1. Need little correction in the post --

    "Is your gross total annual income below Rs 10 lakh?
    Have you made any transactions in equity or derivatives before November 23, 2012?
    if answer of the both of above question is no then you can avail this deduction .Follow these steps to avail the deduction u/s 80CCG (RGESS)"

    It should be if answer to first question is YES and answer to second question is NO.