rajiv gandhi equity savings scheme
TRANSCRIPT
Rajiv GandhiEquity Savings Scheme
RGESS(Rajiv Gandhi Equity Savings Scheme)
Introduction
• New Tax advantage Equity scheme aimed at first time retail investors with annual income of up to Rs 10 lakhs
• Tax Benefit - Deduction u/s 80 CCG, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C
• Maximum amount that can be invested is Rs 50,000. Maximum deduction available is 50% of Rs 50,000 i.e. Rs 25,000
• Lock in period of 3 years – Fixed Lock in during the first year and flexible lock in for subsequent two years
Overview
Interested customers need to submit RGESS FORM A to apply for the scheme and confirm their eligibility
The eligibility criteria is• If your annual income is less than or equal to Rs.10,00,000/-
• If you have never traded in the Equity or Derivatives segment
• If you have never opened a Demat A/c
• If you’re an existing Demat A/c holder but have not made any transaction in the Equity or Derivative Segment
Eligibility
• Stocks that are part of ‘CNX-100’ (by NSE) or ‘BSE-100’ (by BSE)
• Equity shares of public sector enterprises that are categorized as
• Maharatna, Navratna or Miniratna
• Units of Exchange-Traded Funds (ETFs)* or Mutual Fund schemes*
* List of Mutual Fund Schemes and ETFs would be declared on an ongoing basis as and when the notification of the fund or ETF’s eligibility is received.
List Of Eligible Securities
• First Rs 50,000 worth of stock would be automatically locked for one year by NSDL (unless RGESS Form B given within one month of trade)
• Shares to be locked for a year from the last trade in RGESS list
• One multiple against Cash margin
• Depository shall furnish an annual statement of the eligible securities invested in or traded through the Demat account to the Demat account holder.
• After the completion of fixed lock in period, there is no imposed lock in and it will be client’s responsibility to keep the value of the investment portfolio of eligible securities equal to or more than the amount claimed as investment for the purposes of deduction for a minimum of 270 days in the subsequent 2 years of flexible lock in period’
Product Features
Trade Date (settlement start date) Value of Securities Lock in period till
23/12/2012 30,000.0003/03/2014
04/03/2013 20,000.00
Fixed Lock-in• Shall commence from the date of purchase of first set of eligible securities in
the relevant financial year and end one year from the date of purchase of the last set of eligible securities (in the same financial year).
Fixed Lock-in Period
Flexible Lock-in
• The period of two years beginning immediately after the end of the fixed lock-in period shall be called the ‘Flexible Lock-in’ period
• During ‘Flexible lock-in’ period, you can sell eligible securities held in your Demat account, subject to certain conditions which are mentioned in the following slide
Flexible Lock-in Period
Case A – If the value of Initial investment is HIGHER in year 2
• In case you sell eligible securities during ‘Flexible lock-in’ period and value of investment portfolio held under RGESS within ‘Flexible lock-in’ period remain equal to or higher than the amount claimed as investment for the purpose of deduction under section 80CCG of IT Act, for a cumulative period of a minimum of two hundred and seventy days during each of the two years of the flexible lock-in period
• In short – You can sell the shares provided the value of holding remains the same as the amount invested in year one on which you’ve claimed the tax benefit
• Example – If you've invested Rs 30,000 in year one, and if the value appreciates to Rs 50,000, you may sell up to Rs 20,000 in year 2
Different Scenarios - Lock-in Period
Case B – If the value of Initial investment is LOWER in year 2
• In case value of investment portfolio held under RGESS within ‘Flexible lock-in’ period fall due to fall in the market rate of eligible securities and you sell eligible securities during ‘Flexible lock-in’ period, then value of investment portfolio under RGESS for a cumulative period of a minimum of two hundred and seventy days during each of the two years of the flexible lock-in period should be equal to or higher than:
• The amount claimed as investment for the purpose of deduction under section 80CCG of the IT Act
OR • The value of investment portfolio held under RGESS before such sell
whichever is lower.
Example given in the next slide
Different Scenarios - Lock-in Period
• Case B – Example
- Value of Initial Investment in year 1 is Rs 40,000- Value of Investment in year 2 falls to Rs 30,000- If customers sells securities worth Rs 20,000, the value of investment in year
2 for a period of 270 days cumulative should be Rs 30,000
Different Scenarios - Lock-in Period
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