Who can invest in RGESS?
|New retail investors with an annual gross income of less than Rs.10 Rs.12 lakhs.|
How much can I invest?
|The maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.|
|Deduction under Section 80CCG of the Income-Tax Act, 1961, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.|
|3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.|
AIM: To encourage the savings of the small investors in domestic capital market.
Rajiv Gandhi Equity Savings Scheme (RGESS) announced in Union Budget 2012-13 is a new equity tax advantage savings scheme for equity investors in India. The scheme got it’s approval on September 21, 2012. It is exclusively for the first time retail investors in securities market.
The investors who invest up to Rs.50,000 in ‘Eligible Securities’ and have gross total annual income less than or equal to Rs.10Rs.12 Lakhs will benefit from a new section 80CCG under the Income Tax Act, 1961 on ‘Deduction in respect of investment under an equity savings scheme’ has been introduced to give tax benefits.
Let us say, you invest Rs.50,000 under RGESS, the amount eligible for tax deduction from your income will be Rs.25,000. Alternatively, if you invest Rs.40,000 under RGESS, the amount eligible for tax deduction will be Rs.20,000. So you may save about Rs.2,575, Rs.5,150 for income tax slabs 10% and 20% respectively under this scheme.
BSE S&P 100 is a broad based index comprising of 100 large, well established and financially sound companies across sectors.
|ABB India Ltd||500002|
|Adani Enterprises Ltd||512599|
|Adani Ports and Special Economic Zone||532921|
|Adani Power Ltd||533096|
|Aditya Birla Nuvo Ltd||500303|
|Ambuja Cements Ltd||500425|
|Ashok Leyland Ltd||500477|
|Asian Paints Ltd||500820|
|Axis Bank Ltd||532215|
|Bajaj Auto Ltd||532977|
|Bank of Baroda||532134|
|Bank of India||532149|
|Bharat Forge Ltd||500493|
|Bharat Heavy Electricals Ltd||500103|
|Bharat Petroleum Corp Ltd||500547|
|Bharti Airtel Ltd||532454|
|Cairn India Ltd||532792|
|Coal India Ltd||533278|
|Colgate-Palmolive India Ltd||500830|
|Crompton Greaves Ltd||500093|
|Cummins India Ltd||500480|
|Dabur India Ltd||500096|
|Divi’s Laboratories Ltd||532488|
|Dr Reddy’s Laboratories Ltd||500124|
|Exide Industries Ltd||500086|
|Federal Bank Ltd||500469|
|Gail India Ltd||532155|
|Glenmark Pharmaceuticals Ltd||532296|
|GMR Infrastructure Ltd||532754|
|Godrej Consumer Products Ltd||532424|
|Grasim Industries Ltd||500300|
|HCL Technologies Ltd||532281|
|HDFC Bank Ltd||500180|
|Hero MotoCorp Ltd||500182|
|Hindalco Industries Ltd||500440|
|Hindustan Petroleum Corp Ltd||500104|
|Hindustan Unilever Ltd||500696|
|Hindustan Zinc Ltd||500188|
|Housing Development & Infrastructure Ltd||532873|
|Housing Development Finance Corp||500010|
|ICICI Bank Ltd||532174|
|IDBI Bank Ltd||500116|
|Idea Cellular Ltd||532822|
|Indian Oil Corp Ltd||530965|
|IndusInd Bank Ltd||532187|
|Jaiprakash Associates Ltd||532532|
|Jindal Steel & Power Ltd||532286|
|JSW Steel Ltd||500228|
|Kotak Mahindra Bank Ltd||500247|
|Larsen & Toubro Ltd||500510|
|LIC Housing Finance Ltd||500253|
|Mahindra & Mahindra Financial Services Ltd||532720|
|Mahindra & Mahindra Ltd||500520|
|Maruti Suzuki India Ltd||532500|
|Nestle India Ltd||500790|
|Oil & Natural Gas Corp Ltd||500312|
|Power Finance Corp Ltd||532810|
|Power Grid Corp of India Ltd||532898|
|Punjab National Bank||532461|
|Ranbaxy Laboratories Ltd||500359|
|Reliance Capital Ltd||500111|
|Reliance Communications Ltd||532712|
|Reliance Industries Ltd||500325|
|Reliance Infrastructure Ltd||500390|
|Reliance Power Ltd||532939|
|Rural Electrification Corp Ltd||532955|
|Sesa Sterlite Ltd||500295|
|Shriram Transport Finance Co Ltd||511218|
|Siemens India Ltd||500550|
|State Bank of India||500112|
|Steel Authority of India Ltd||500113|
|Sun Pharmaceutical Industries Ltd||524715|
|Tata Chemicals Ltd||500770|
|Tata Consultancy Services Ltd||532540|
|Tata Global Beverages Ltd||500800|
|Tata Motors Ltd||500570|
|Tata Power Co Ltd||500400|
|Tata Steel Ltd||500470|
|Tech Mahindra Ltd||532755|
|Titan Co Ltd||500114|
|UltraTech Cement Ltd||532538|
|Union Bank of India||532477|
|United Breweries Ltd||532478|
|United Spirits Ltd||532432|
|Yes Bank Ltd||532648|
|Zee Entertainment Enterprises Ltd||505537|
source: spindices.com (as on feb, 2014)
NSE CNX 100 is a diversified 100 stock index accounting for 38 sectors of the economy.
|Adani Enterprises Ltd.||ADANIENT|
|Adani Ports and Special Economic Zone Ltd.||ADANIPORTS|
|Aditya Birla Nuvo Ltd.||ABIRLANUVO|
|Ambuja Cements Ltd.||AMBUJACEM|
|Apollo Hospitals Enterprises Ltd.||APOLLOHOSP|
|Asian Paints Ltd.||ASIANPAINT|
|Axis Bank Ltd.||AXISBANK|
|Bajaj Auto Ltd.||BAJAJ-AUTO|
|Bajaj Finserv Ltd.||BAJAJFINSV|
|Bajaj Holdings & Investment Ltd.||BAJAJHLDNG|
|Bank of Baroda||BANKBARODA|
|Bank of India||BANKINDIA|
|Bharat Forge Ltd.||BHARATFORG|
|Bharat Heavy Electricals Ltd.||BHEL|
|Bharat Petroleum Corporation Ltd.||BPCL|
|Bharti Airtel Ltd.||BHARTIARTL|
|Cairn India Ltd.||CAIRN|
|Coal India Ltd.||COALINDIA|
|Colgate Palmolive (India) Ltd.||COLPAL|
|Container Corporation of India Ltd.||CONCOR|
|Crompton Greaves Ltd.||CROMPGREAV|
|Cummins India Ltd.||CUMMINSIND|
|Dabur India Ltd.||DABUR|
|Divi’s Laboratories Ltd.||DIVISLAB|
|Dr. Reddy’s Laboratories Ltd.||DRREDDY|
|Exide Industries Ltd.||EXIDEIND|
|Federal Bank Ltd.||FEDERALBNK|
|GAIL (India) Ltd.||GAIL|
|GlaxoSmithkline Consumer Healthcare Ltd.||GSKCONS|
|Glaxosmithkline Pharmaceuticals Ltd.||GLAXO|
|Glenmark Pharmaceuticals Ltd.||GLENMARK|
|Godrej Consumer Products Ltd.||GODREJCP|
|Grasim Industries Ltd.||GRASIM|
|HCL Technologies Ltd.||HCLTECH|
|HDFC Bank Ltd.||HDFCBANK|
|Hero MotoCorp Ltd.||HEROMOTOCO|
|Hindalco Industries Ltd.||HINDALCO|
|Hindustan Petroleum Corporation Ltd.||HINDPETRO|
|Hindustan Unilever Ltd.||HINDUNILVR|
|Housing Development Finance Corporation Ltd.||HDFC|
|I T C Ltd.||ITC|
|ICICI Bank Ltd.||ICICIBANK|
|IDBI Bank Ltd.||IDBI|
|Idea Cellular Ltd.||IDEA|
|IndusInd Bank Ltd.||INDUSINDBK|
|JSW Steel Ltd.||JSWSTEEL|
|Jaiprakash Associates Ltd.||JPASSOCIAT|
|Jindal Steel & Power Ltd.||JINDALSTEL|
|Kotak Mahindra Bank Ltd.||KOTAKBANK|
|LIC Housing Finance Ltd.||LICHSGFIN|
|Larsen & Toubro Ltd.||LT|
|Mahindra & Mahindra Financial Services Ltd.||M&MFIN|
|Mahindra & Mahindra Ltd.||M&M|
|Maruti Suzuki India Ltd.||MARUTI|
|Oil & Natural Gas Corporation Ltd.||ONGC|
|Oil India Ltd.||OIL|
|Oracle Financial Services Software Ltd.||OFSS|
|Petronet LNG Ltd.||PETRONET|
|Power Finance Corporation Ltd.||PFC|
|Power Grid Corporation of India Ltd.||POWERGRID|
|Punjab National Bank||PNB|
|Ranbaxy Laboratories Ltd.||RANBAXY|
|Reliance Capital Ltd.||RELCAPITAL|
|Reliance Communications Ltd.||RCOM|
|Reliance Industries Ltd.||RELIANCE|
|Reliance Power Ltd.||RPOWER|
|Rural Electrification Corporation Ltd.||RECLTD|
|Sesa Sterlite Ltd.||SSLT|
|Shriram Transport Finance Co. Ltd.||SRTRANSFIN|
|State Bank of India||SBIN|
|Steel Authority of India Ltd.||SAIL|
|Sun Pharmaceutical Industries Ltd.||SUNPHARMA|
|Tata Chemicals Ltd.||TATACHEM|
|Tata Consultancy Services Ltd.||TCS|
|Tata Global Beverages Ltd.||TATAGLOBAL|
|Tata Motors Ltd.||TATAMOTORS|
|Tata Power Co. Ltd.||TATAPOWER|
|Tata Steel Ltd.||TATASTEEL|
|Tech Mahindra Ltd.||TECHM|
|Titan Company Ltd.||TITAN|
|UltraTech Cement Ltd.||ULTRACEMCO|
|Union Bank of India||UNIONBANK|
|United Breweries Ltd.||UBL|
|United Spirits Ltd.||MCDOWELL-N|
|Yes Bank Ltd.||YESBANK|
|Zee Entertainment Enterprises Ltd.||ZEEL|
source: nseindia.com (as on feb, 2014)
- BHARAT HEAVY ELECTRICALS LTD.
- COAL INDIA LTD.
- GAIL (INDIA) LTD.
- INDIAN OIL CORP.LTD.
- NTPC LTD.
- OIL & NATURAL GAS CORP.LTD.
- STEEL AUTHORITY OF INDIA LTD.
- BHARAT ELECTRONICS LTD.
- BHARAT PETROLEUM CORP.LTD.
- HINDUSTAN AERONAUTICS LTD.
- HINDUSTAN PETROLEUM CORP.LTD.
- MAHANAGAR TELEPHONE NIGAM LTD.
- NATIONAL ALUMINIUM CO.LTD.
- NEYVELI LIGNITE CORP.LTD.
- NMDC LTD.
- OIL INDIA LTD.
- POWER FINANCE CORP.LTD.
- POWER GRID CORP.OF INDIA LTD.
- RASHTRIYA ISPAT NIGAM LTD.
- RURAL ELECTRIFICATION CORP.LTD.
- SHIPPING CORP.OF INDIA LTD.,THE
- AIRPORTS AUTHORITY OF INDIA
- ANTRIX CORP.LTD.
- BALMER LAWRIE & CO.LTD.
- BEML LTD.
- BHARAT DYNAMICS LTD.
- BHARAT SANCHAR NIGAM LTD.
- BRIDGE & ROOF CO.(INDIA) LTD.
- CENTRAL COALFIELDS LTD.
- CENTRAL WAREHOUSING CORP.
- CHENNAI PETROLEUM CORP.LTD.
- COCHIN SHIPYARD LTD.
- CONTAINER CORP.OF INDIA LTD.
- DREDGING CORP.OF INDIA LTD.
- ENGINEERS INDIA LTD.
- ENNORE PORT LTD.
- GARDEN REACH SHIPBUILDERS & ENGINEERS LTD.
- GOA SHIPYARD LTD.
- HINDUSTAN COPPER LTD.
- HINDUSTAN NEWSPRINT LTD.
- HINDUSTAN PAPER CORP.LTD.
- HLL LIFECARE LTD.
- HOUSING & URBAN DEVELOPMENT CORP.LTD.
- INDIA TOURISM DEVELOPMENT CORP.LTD.
- INDIAN RAILWAY CATERING & TOURISM CORP.LTD.
- IRCON INTERNATIONAL LTD.
- KIOCL LTD.
- MAHANADI COALFIELDS LTD.
- MANGALORE REFINERY & PETROCHEMICALS LTD.
- MAZAGON DOCK LTD.
- MISHRA DHATU NIGAM LTD.
- MMTC LTD.
- MOIL LTD.
- MSTC LTD.
- NATIONAL FERTILIZERS LTD.
- NATIONAL SEEDS CORP.LTD.
- NHPC LTD.
- NORTH EASTERN ELECTRIC POWER CORP.LTD.,THE
- NORTHERN COALFIELDS LTD.
- NUMALIGARH REFINERY LTD.
- ONGC VIDESH LTD.
- PAWAN HANS HELICOPTERS LTD.
- PROJECTS & DEVELOPMENT INDIA LTD.
- RAILTEL CORP.OF INDIA LTD.
- RASHTRIYA CHEMICALS & FERTILIZERS LTD.
- RITES LTD.
- SECURITY PRINTING & MINTING CORP.INDIA LTD.
- SJVN LTD.
- SOUTH EASTERN COALFIELDS LTD.
- STATE TRADING CORP.OF INDIA LTD.,THE
- TELECOMMUNICATIONS CONSULTANTS INDIA LTD.
- THDC INDIA LTD.
- WAPCOS LTD.
- WESTERN COALFIELDS LTD.
- BHARAT PUMPS & COMPRESSORS LTD.
- BROADCAST ENGINEERING CONSULTANTS INDIA LTD.
- CENTRAL MINE PLANNING & DESIGN INSTITUTE LTD.
- EDCIL (INDIA) LTD.
- ENGINEERING PROJECTS (INDIA) LTD.
- FCI ARAVALI GYPSUM & MINERALS INDIA LTD.
- FERRO SCRAP NIGAM LTD.
- HMT (INTERNATIONAL) LTD.
- HSCC (INDIA) LTD.
- INDIA TRADE PROMOTION ORGANISATION
- INDIAN MEDICINES PHARMACEUTICAL CORP.LTD.
- MECON LTD.
- MINERAL EXPLORATION CORP.LTD.
- NATIONAL FILM DEVELOPMENT CORP.LTD.
- NATIONAL SMALL INDUSTRIES CORP.LTD.,THE
- PEC LTD.
- RAJASTHAN ELECTRONICS & INSTRUMENTS LTD.
Source: Department of Public Enterprises (as on Oct, 2013)
You can pick any of the following mutual funds and ETFs currently available for investment cum tax saving purpose.
|Mutual Fund / ETF|
|Birla SL Focused Equity Ser 1 Direct|
|Birla SL Focused Equity Ser 1 Reg|
|Birla SL Nifty ETF|
|Birla SL RGESS Series 1 Direct|
|Birla SL RGESS Series 1 Reg|
|DSPBR RGESS Series 1 Direct|
|DSPBR RGESS Series 1 Reg|
|Goldman Sachs Banking BeES|
|Goldman Sachs CNX Nifty Shariah BeES|
|Goldman Sachs Nifty BeES|
|Goldman Sachs Nifty Junior BeES|
|HDFC RGESS Series 1 Direct|
|HDFC RGESS Series 1 Reg|
|HDFC RGESS Series 2 Direct|
|HDFC RGESS Series 2 Reg|
|ICICI Pru CNX 100 ETF|
|ICICI Pru Equity Savings Series 1 Direct|
|ICICI Pru Equity Savings Series 1 Reg|
|ICICI Pru Nifty ETF|
|IDBI RGESS Series 1 Plan A Direct|
|IDBI RGESS Series 1 Plan A Reg|
|IIFL Nifty ETF|
|Kotak Nifty ETF|
|Kotak Sensex ETF|
|LIC Nomura MF RGESS Series 1 Direct|
|LIC Nomura MF RGESS Series 1 Reg|
|Motilal Oswal MOSt Shares M50 ETF|
|Reliance Shares Banking ETF|
|Reliance Shares Nifty ETF|
|Religare Invesco Nifty ETF|
|SBI Sensex ETF|
|UTI RGESS Direct|
|UTI RGESS Retail|
You’re eligible if
- Demat Account not opened. If opened but not transacted in equity or F&O, derivatives before November 23, 2012.
- Resident Individual
- Gross total annual Income less than Rs.10 Rs.12 lakh.
The tax deduction under RGESS shall be available to a new retail investor whose gross total income for the financial year (1 April to 31 March) in which the investment is made under the Scheme is less than or equal to 10 12 lakh rupees.
A new retail investor is defined as follows:
- Any resident Individual who has not opened a demat account and has not made any transactions in the equity or derivative segment as on the date of notification of the scheme i.e., November 23, 2012. OR
- Any resident Individual who has opened a demat account as a first holder, but has not transacted in the equity or derivate segment till November 23, 2012. OR
- Any resident Individual who has a demat account as a joint holder.
- Equity Shares in BSE-100 or CNX 100
- Equity Shares of Maharatna, Navratna, Miniratna
- Units of eligible ETFs or MFs
- Eligible FPOs & NFOs
- IPOs of eligible PSUs
List of eligible securities will be made available on the website of the stock exchanges (NSE, BSE).
The security should be RGESS eligible at the time of investment. Such security will be considered for RGESS investment, even if it becomes ineligible at a later date.
If an investor does not comply with the RGESS guidelines, the deduction shall be reversed, and will be considered the income of the assessee and liable to taxation.
The costs like brokerage charges, securities transaction tax, stamp duty and service tax shall not be included while considering investments of up to Rs 50,000.
The eligible securities brought into the demat account will be automatically locked-in from the date of investment till one year from the date of last purchase of RGESS eligible securities. This period is called ‘Fixed Lock-in’ during which you cannot pledge or sell these securities.
- Holding Period = 3 Years
- Fixed lock-in Period = 1 Year from the date of credit
- Flexible lock-in Period = 2 Years from the end of Fixed lock in period
During subsequent two years called as Flexible Lock-in, you can sell and buy RGESS securities. However, you will have to maintain the value of RGESS investment for cumulative period of 270 days during each of these two years.
Let us say, you have purchased eligible securities worth Rs. 50,000 in a RGESS designated demat account on December 31, 2012. The eligible securities will be in ‘Fixed lock-in’ till December 30, 2013 and for flexible lock-in till December 30, 2015.
In case you do not wish to claim tax deduction on a security, then a declaration in the prescribed format (Form B) should be submitted within one month from the date of credit to the DP.
Your demat account that was designated for RGESS will be converted into a regular or ordinary demat account at the end of the flexible lock-in period.
In order to open DEMAT account for RGESS make sure the investor:
- does not have any other demat account as a first holder in CDSL OR
- has opened a demat account (as a first holder) in CDSL and not had
- any transactions in equity in the said account.
- does not have any other demat account in CDSL with RGESS
- is PAN compliant.
The retail investors are restricted to hold the securities only in “DEMAT” account provided by many Depository Participants (DPs) of CDSL. The list of DPs under CDSL can be found here.
In addition to KYC requirements like ID Proof, Address Proof, PAN Copy, you are also requested to provide a declaration form “Form A”, which you can get from the DP you’re applying to, in prescribed format for availing RGESS benefits. This declaration form will help you designate your new or existing demat account as RGESS.
In case the investor want to exclude any RGESS eligible scrip from his RGESS portfolio, he has to submit “Form B” within one month from the date of the credit in his demat account.
Please note you can have only one DEMAT account for the purpose of availing RGESS benefits.
After getting ready with your new DEMAT account or designation your existing DEMAT account as RGESS, you can approach any SEBI registered stock broker with your Demat Account Number and DP ID for investing in eligible securities.
RGESS vs PPF vs ELSS
We did a quick comparision of RGESS with the top tax saving schemes available in India and the result is:-
|Eligibility||Annual Income less than Rs.10 Rs.12 Lakhs||None||None|
|Lock-in Period||1+2||3 years||15 Years|
|Tax Benefits||50% (80 CCG)||100% (80 C)||100% (80 C)|
|Maximum Investment for Deduction||Rs.50,000||Rs.100,000||Rs.100,000|
|Minimum Investment||N/A||Rs.500 to Rs.5000||Rs.500|
|Need for DEMAT||Yes||No||No|
|Annual Return||Market Based||Market Based||8.8%|
|Interest Earned||Non Taxable||Non Taxable||Non Taxable|
|Risk||Medium to High||Medium to High||Low|
Note: You need a PAN Card, Bank Account or optionally DEMAT account for equity linked schemes with all the schemes compared above.