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You could get tax benefits of up to Rs 2 lakh under scheme replacing RGESS

The conditions for availing of tax benefits under the new scheme expected to be less rigorous

BS Reporter  |  New Delhi 

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The government is planning to come out with a new scheme to replace the Rajiv Gandhi Equity Savings Scheme (RGESS), which was discontinued in Budget 2017. The new scheme is expected to enhance the maximum amount you can invest for availing of tax benefits to Rs 2 lakh, compared with Rs 50,000 under

Many of the pre-conditions attached to RGESS, which had contributed to its failure to take off, may be relaxed in the new scheme. Even existing account holders may be allowed to invest in it, provided their annual transaction level does not exceed a certain limit.

The government had introduced in Budget 2012-13 to encourage investment in the capital by retail investors. It was targeted at first-time equity investors, who had not opened a account and not done any trading. The income level of the first-time investor could not exceed Rs 12 lakh. The investor was eligible for deduction under Section 80CCG on 50 per cent of the amount invested during the year, up to a maximum limit of Rs 50,000 per financial year. Thus, the maximum amount eligible for deduction under the scheme was Rs 25,000. This benefit was available for three consecutive financial years. Investments had a lock-in of three years, with some flexibility allowed after the first year. Investors could invest in only a limited category of stocks to be eligible for benefits under RGESS: the top 100 stocks on the NSE and BSE; shares of maharatna, navaratna and and miniratna PSUs; and exchange traded funds and mutual funds which invested in top 100 stocks or of maha/mini/navaratna PSUs.

The various pre-conditions attached to availing of tax benefit under prevented the product from becoming popular. "The scheme did not take off because it was limited to first-time investors and to those whose annual income did not exceed Rs 12 lakh. Not many people met these criteria, so as financial planners, we were not able to recommend it to too many of our clients. Besides, the tax benefits were also limited," says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors.   

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You could get tax benefits of up to Rs 2 lakh under scheme replacing RGESS

The conditions for availing of tax benefits under the new scheme expected to be less rigorous

The conditions for availing of tax benefits under the new scheme expected to be less rigorous
The government is planning to come out with a new scheme to replace the Rajiv Gandhi Equity Savings Scheme (RGESS), which was discontinued in Budget 2017. The new scheme is expected to enhance the maximum amount you can invest for availing of tax benefits to Rs 2 lakh, compared with Rs 50,000 under

Many of the pre-conditions attached to RGESS, which had contributed to its failure to take off, may be relaxed in the new scheme. Even existing account holders may be allowed to invest in it, provided their annual transaction level does not exceed a certain limit.

The government had introduced in Budget 2012-13 to encourage investment in the capital by retail investors. It was targeted at first-time equity investors, who had not opened a account and not done any trading. The income level of the first-time investor could not exceed Rs 12 lakh. The investor was eligible for deduction under Section 80CCG on 50 per cent of the amount invested during the year, up to a maximum limit of Rs 50,000 per financial year. Thus, the maximum amount eligible for deduction under the scheme was Rs 25,000. This benefit was available for three consecutive financial years. Investments had a lock-in of three years, with some flexibility allowed after the first year. Investors could invest in only a limited category of stocks to be eligible for benefits under RGESS: the top 100 stocks on the NSE and BSE; shares of maharatna, navaratna and and miniratna PSUs; and exchange traded funds and mutual funds which invested in top 100 stocks or of maha/mini/navaratna PSUs.

The various pre-conditions attached to availing of tax benefit under prevented the product from becoming popular. "The scheme did not take off because it was limited to first-time investors and to those whose annual income did not exceed Rs 12 lakh. Not many people met these criteria, so as financial planners, we were not able to recommend it to too many of our clients. Besides, the tax benefits were also limited," says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors.   
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Business Standard
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You could get tax benefits of up to Rs 2 lakh under scheme replacing RGESS

The conditions for availing of tax benefits under the new scheme expected to be less rigorous

The government is planning to come out with a new scheme to replace the Rajiv Gandhi Equity Savings Scheme (RGESS), which was discontinued in Budget 2017. The new scheme is expected to enhance the maximum amount you can invest for availing of tax benefits to Rs 2 lakh, compared with Rs 50,000 under

Many of the pre-conditions attached to RGESS, which had contributed to its failure to take off, may be relaxed in the new scheme. Even existing account holders may be allowed to invest in it, provided their annual transaction level does not exceed a certain limit.

The government had introduced in Budget 2012-13 to encourage investment in the capital by retail investors. It was targeted at first-time equity investors, who had not opened a account and not done any trading. The income level of the first-time investor could not exceed Rs 12 lakh. The investor was eligible for deduction under Section 80CCG on 50 per cent of the amount invested during the year, up to a maximum limit of Rs 50,000 per financial year. Thus, the maximum amount eligible for deduction under the scheme was Rs 25,000. This benefit was available for three consecutive financial years. Investments had a lock-in of three years, with some flexibility allowed after the first year. Investors could invest in only a limited category of stocks to be eligible for benefits under RGESS: the top 100 stocks on the NSE and BSE; shares of maharatna, navaratna and and miniratna PSUs; and exchange traded funds and mutual funds which invested in top 100 stocks or of maha/mini/navaratna PSUs.

The various pre-conditions attached to availing of tax benefit under prevented the product from becoming popular. "The scheme did not take off because it was limited to first-time investors and to those whose annual income did not exceed Rs 12 lakh. Not many people met these criteria, so as financial planners, we were not able to recommend it to too many of our clients. Besides, the tax benefits were also limited," says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors.   

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Business Standard
177 22