Rajiv Gandhi Equity Saving Scheme (RGESS)

 Rajiv Gandhi Equity Savings Scheme (RGESS) is an attempt by Govt to improve equity participation announced in Union Budget 2012-13. SEBI issued circular in this respect on Dec 06, 2012.

The scheme was notified by the Department of Revenue, Finance Ministry on November 23, 2012.

 Major points to be noted are:

Only first time investors : 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 derivative segment till November 23, 2012.

Investors with taxable income of less than Rs 10 lakh can participate.

There is also one year blanket lock-in, and an overall lock-in of three years, so it is not liquid, 

The maximum investment allowed is Rs 50,000 and the investor gets a tax rebate that is 50% deduction of the amount invested,  is being made available in the Income-tax Act 1961 in terms of the provision contained in section 80CCG. That means one can have installment remittances or single sum according to his choice.

Tax saving can be made by taking an exposure to Rajiv Gandhi Equity Investment Scheme and thereby cutting down your tax payment by Rs. 2,500 to Rs. 5,000 in the year of investment.  

The scheme allows investments only in largecap type of stocks, CNX 100 etc It is a very huge filter and so the depositary participant is given the responsibility of checking it out. They will check it out from the pan number and they will also ensure lock-in through depositary participant as well

Stock exchanges have to furnish the list of RGESS eligible stocks/Exchange Traded Funds (ETFs)/Mutual Fund (MF) schemes on their website.

For RGESS eligible close-ended MF schemes, advice given by AMCs (Asset Management Companies) to the depository for extinguishment of units of close-ended schemes upon maturity of the scheme shall be considered as settled through depository mechanism and therefore RGESS compliant," the SEBI circular said


 Now the opportunity is available for more than 23 million Indians – out of a population of 1.2 billion – could be eligible targets. If they all invest the maximum, there could be a potential inflow of 116 trillion rupees – more than double the country’s gold assets!!!

happy investing!!