Tuesday, December 18, 2012

Income Tax Savings under Rajiv Gandhi Equity Saving Scheme - 80CCG

From the financial year ending March 31, 2013, there is an opportunity to save up to 50% of the amount invested in notified equity schemes under newly inserted Section 80CCG for Rajiv Gandhi Equity Saving Scheme. The income tax savings under this can be a maximum of INR 25,000.

  • The deduction under this section is available, if the following conditions are satisfied:
  • The Assessee is a resident individual
  • Gross total income does not exceed INR 10 lakhs
  • Is a new retail investor as specified in ”RGESS”
  • The stocks listed under the BSE 100 or CNX 100, or those specified public sector undertakings would be eligible under the scheme. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPOs of PSUs, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs.4,000 Crores for each of the immediate past three years, would also be eligible.
  • Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS.
  • Investments are allowed to be made in installments in the year in which tax claims are made.
  • The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.
  • After the first year, investors would be allowed to trade in the securities subject to fulfilling certain requirements as specified in the scheme.
  • The closing price as on the previous day of the date of trading will be considered for valuation of shares.
  • In case the investor fails to meet the conditions stipulated, the tax benefit will be withdrawn.

Here are some links that you can visit to familiarize yourself with this scheme.

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