To advertise the Retail Investor to put money into Shares and Mutual Funds, the Govt has launched the Rajiv Gandhi Fairness Saving Scheme (RGESS) which permits a deduction beneath Part 80CCG for Funding in specified fairness shares and Mutual Funds.
The deduction allowed beneath Part 80CCG is over and above the Rs. 1,50,000 deduction allowed beneath Part 80C. These deductions could be claimed on the time of submitting of earnings tax return and the earnings of the taxpayer (after decreasing all deductions) could be taxable as per the earnings tax slab charges of the person.
- Present Revenue Tax Slab Fee
- 10 helpful Revenue Tax Deductions for People to Save Tax
Price range 2017 Replace: This Deduction isn’t allowed from Monetary Yr 2017-18 onwards.
Key Options of Part 80CCG: Rajiv Gandhi Fairness Saving Scheme (RGESS
- Revenue Tax Deduction beneath Part 80CCG for Funding by way of Rajiv Gandhi Fairness Saving Scheme is obtainable to solely people and to not HUF’s. Furthermore, the person ought to be resident in India and shouldn’t be a non-resident.
- The Revenue of the investor investing within the Rajiv Gandhi Fairness Saving Scheme for the monetary yr during which the funding is being made ought to be lower than 12 Lakhs to be eligible to assert deduction beneath Part 80CCG.
- There’s a lock-in interval of three years for the investments beneath the Rajiv Gandhi Fairness Saving Scheme. The 1st yr is the fastened lock-in interval and the following 2 years are the versatile lock-in interval.
- The Investor can’t promote the securities throughout the fastened lock-in interval however he can promote the securities throughout the versatile lock-in interval.
- Buyers promoting securities throughout the versatile lock-in interval could be required to re-invest in any of the eligible securities in such a way that they preserve their degree of funding throughout these 2 years on the quantity for which they’ve claimed earnings tax deduction beneath Part 80CCG or preserve their degree of funding on the worth of the portfolio earlier than initiating a sale transaction, whichever is much less, for no less than 270 days in a yr.
There are particular problems within the Rajiv Gandhi Fairness Saving Scheme (RGESS) with respect to therapy of securities bought within the versatile lock-in interval and the deductions allowed beneath Part 80CCG. These have been defined intimately within the FAQ’s on Rajiv Gandhi Fairness Saving Scheme (RGESS) launched by the Ministry of Finance on 5th Feb 2014.
- Refer: FAQ on Rajiv Gandhi Fairness Saving Scheme (RGESS)
People eligible to assert good thing about Rajiv Gandhi Fairness Saving Scheme (RGESS)
This earnings tax deduction beneath Part 80CCG is barely obtainable to new retail investor. The brand new retail investor might put money into a number of monetary years in a block of three consecutive monetary years starting with the preliminary yr.
The phrase New Retail Investor means:-
- Any particular person who has not opened a demat account and has not made any transactions within the spinoff phase as on the date of notification of the Scheme;
- Any particular person who has opened a demat account earlier than the notification of the Scheme however has not made any transactions within the fairness phase or the spinoff phase until the date of notification of the Scheme,
People who’re the second holder of an account and don’t have any account as the primary holder, are additionally eligible to be labeled as a brand new retail investor and are allowed to assert deduction beneath Part 80CCG for the Rajiv Gandhi Fairness Saving Scheme.
Furthermore, it has additionally been clarified that Buyers who don’t have a demat account however have bodily shares of corporations are allowed to assert deduction beneath Part 80CCG for the Rajiv Gandhi Fairness Saving Scheme.
- Advisable Learn: Easy methods to open a Demat Account?
Eligible Securities for Rajiv Gandhi Fairness Saving Scheme (RGESS)
- The highest 100 shares of NSE and BSE i.e. CNX-100/BSE-100
- Fairness Shares of Public Sector Enterprises that are categorized by the Govt as Maharatna, Navaratna and Miniratna
- Items of Change Traded Funds (ETF’s) or Mutual Fund (MF) Schemes with RGESS eligible securities as talked about in (1) and (2) above.
- Observe-on Public Affords (FPO’s) of securities talked about in (1) and (2) above
- New Fund Affords (NFO’s) of (3) above
- Preliminary Public Affords (IPO’s) of PSU’s that are scheduled to get listed within the related monetary yr and the place the Govt holding is lower than 51% and whose annual turnover isn’t lower than Rs. 4000 crore for every of the speedy previous three monetary years.
The record of eligible securities and eligible mutual funds for Rajiv Gandhi Fairness Saving Scheme (RGESS) has been given on this hyperlink: – http://www.bseindia.com/rgess/eligible_securities.htm
Deduction allowed for Funding in Rajiv Gandhi Fairness Saving Scheme (RGESS)
The deduction allowed for investing in Rajiv Gandhi Fairness Saving Scheme (RGESS) is 50% of the whole quantity invested topic to a most funding of Rs. 50,000.
The above talked about standards for eligible deduction have been defined under with the assistance of some examples:-
|Particulars||Case I||Case II||Case III|
|Quantity invested in RGESS||50,000||90,000||20,000|
|Most eligible funding in RGESS
(i.e. Rs. 50,000 or amt invested, whichever is increased)
|Deduction allowed = 50% of eligible funding||25,000||25,000||10,000|
Different Related Factors relating to Rajiv Gandhi Fairness Saving Scheme
- Through the interval of Fastened Lock-in, the investor isn’t allowed to promote, hypothecate or pledge any safety. Nevertheless, he might accomplish that throughout the Versatile Lock-in interval.
- The prices like brokerage and STT shall not be included whereas contemplating investments of as much as Rs 50,000.
- A demat account is required for investing beneath the RGESS. If the investor already has one, he must designate it for availing of the profit beneath the scheme. For the aim of designating an current demat account for RGESS, the investor will probably be required to furnish Kind A and a replica of the PAN Card.
- If the person doesn’t need to allocate sure securities to the Rajiv Gandhi Fairness Saving Scheme (RGESS), he could be required to furnish Kind B inside 1 month of the date of transaction and such securities wouldn’t be allowed to be claimed as deduction nor would they be beneath the lock-in interval.
- If the eligible securities are bought earlier than the completion of the lock-in interval, the earnings tax deduction beneath Part 80CCG allowed earlier could be reversed and taxed within the yr during which such securities are bought.