Rajiv Gandhi Equity Savings Scheme

Rajiv Gandhi Equity Savings Scheme

A new scheme called Rajiv Gandhi Equity Savings scheme is proposed in the Union Budget 2012-13 to encourage flow of saving in financial instruments and improve the depths of domestic capital market. 

The Union Finance Minister ShriPranab Mukherjee in his Budget speech in LokSabha today said that the scheme allows for income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakhs. The scheme will have lock-in period of three years. The details will be announced in due course.  


Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS),tax rebate u/s 80CCGThis email contains graphics, so if you don't 


Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) is a new equity tax advantage savings scheme for equity investors in India, with the stated objective of "encouraging the savings of the small investors in the domestic capital markets.” Vide notification dated November 23, 2012 the scheme has been notified by the Department of Revenue, Ministry of Finance (MOF). It is exclusively for the first time retail investors in securities market.

The objective of the scheme is to encourage flow of savings in the financial instruments and improve the depth of the domestic capital market

·         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 to ‘New Retail Investors’ who invest up to Rs. 50,000 in ‘Eligible Securities’ and have gross total annual income less than or equal to Rs.10 Lakhs. The investor would get a 50% deduction of the amount invested from the taxable income for that year.

·         Gains, arising of investments in RGESS, can be realized after a year. This is in contrast to all other tax saving instruments.

·         Investments are allowed to be made in installments in the year in which the tax claims are filed.

·         Dividend payments are tax free.

·         This scheme has a long run benefit of educating the retail investment segment and thereby moving towards financial inclusivity in the country.


The deduction under the Scheme will be available to a ‘new retail investor’ who complies with the conditions of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to ten lakh rupees.

The deduction under the Scheme shall be available to a new retail investor who:-

·         Is a Individual Resident of India.

·         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

·         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

·         Who has a demat account as a joint holder.

·         Who has gross total income for the financial year less than or equal to Rs. 10 Lakh.

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