What is Rajiv Gandhi Equity Savings Scheme 2012?
Rajiv Gandhi Equity Savings Scheme 2012 came into force wef 23 Nov 2012 . The objective of Rajiv Gandhi Equity Savings Scheme 2012 is to encourage small investors to invest in domestic capital market. It provides tax benefits under section 80CCG of the Income-tax Act, 1961 upto a limit of Rs 50,000/-.
Who are eligible to get deduction under Rajiv Gandhi Equity Savings Scheme 2012?
To be eligible for deduction under the Rajiv Gandhi Equity Savings Scheme, an investor should be a resident Indian and a new retail investor. A new retail investor is defined as
(a) any individual who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the Scheme;
(b) any individual who has opened a demat account before the notification of the Scheme but has not made any transactions in the equity segment or the derivative segment till the date of notification of the Scheme,
and any individual who is not the first account holder of an existing joint demat account shall be deemed to have not opened a demat account for the purposes of this Scheme
which securities are eligible for investment under Rajiv Gandhi Equity Savings Scheme 2012 ?
(a) equity shares, on the day of purchase, falling in the list of equity declared as “BSE-100” or “ CNX-100” by the Bombay Stock Exchange and the National Stock Exchange, as the case may be;
(b) equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government;
(c) Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes with Rajiv Gandhi Equity Savings Scheme (RGESS) eligible securities as underlying, as mentioned in sub-clause (i) or sub-clause (ii) above, provided they are listed and traded on a stock exchange and settled through a depository mechanism;
(d) Follow on Public Offer of sub-clauses (i) and (ii) above;
(e) New Fund Offers (NFOs) of sub-clause (iii) above;
(f) Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years;
Important points to note in Rajiv Gandhi Equity Savings Scheme 2012:
Deduction of a maximum of 50000/- up to the investment limit is applicable only to new retail investors and the deduction is applicable for only ONE assessment year. If any retail investor avails deduction under Rajiv Gandhi Equity Savings Scheme 2012 in any assesment year, he will not be eligible for deductions again under the scheme.
New retail investor should open a new demat account or designate his existing demat account to be eligible under the scheme. Should submit declaration by submitting Form A to depository participant. Should provide PAN No while opening or designating demat account for this purpose
Submit form B if you wish to exclude any securities from the mandatory lock-in period of three years out of which one year is fixed lock-in period and next two years is flexible lock-in period
For procedure to be followed while opening demat account, download Form A (Declaration to be submitted by the investors to the depository participants for availing the benefits under the Rajiv Gandhi Equity Savings Scheme) and download Form B (Declaration to be submitted by the new retail investor to the depository participant on purchase of eligible securities) you can download Rajiv Gandhi Equity Savings Scheme 2012 notification