Rajiv Gandhi Equity Savings Scheme (RGESS)- An Overall Analysis

TG Team 05 Mar 2013 4,868 Views 0 comment Print Income Tax | Articles

CA Mohit Agarwal

Who are the Eligible Investor ?

– who opened a demat account as a ‘first holder’ after November 23, 2012.

– Opened a demat account prior to this date but never bought any shares or traded in the Futures and Options (F&O) segment.

– still qualifies if his name appeared second in a joint demat account before this date.

– Opened a demat a/c to invest in a Gold ETF too doesn’t disqualify him , Since the demat account has no equity security.

Comparative analysis of Changes with provisions introduced by Finance Budget 2013-14

Particulars	FY 2012-13	FY 2013-14
Section	80CCG
Maximum Eligible total Income	Rs 10 Lac	Rs. 12 Lac
Investment in	Listed Equity Shares	Listed Equity Shares / Units of Equity oriented fund*
Maximum amount can be Invest	Rs. 50000	Rs. 50000
Maximum Deduction	Rs. 25000	Rs. 25000
Duration of deduction	Only 1 FY	3 consecutive FY incl. current
Is this over & above the Section 80C limit?	Yes	Yes

Extra Charges – Additional expenses incurred on the acquisition of eligible securities like brokerage, stamp duty, securities transaction tax (STT), service tax etc will not be considered.

Lock-in period

– Overall lock-in period of 3 years which is further divided.

First year is the fixed lock-in period – During this time frame, the investor will not be permitted to sell, pledge or hypothecate any of the shares.
Next two years are the flexible lock-in years – The investor can sell but will have to buy other eligible securities with the proceeds in the same financial year. This is to ensure adherence to a cumulative holding period of 270 days during each of the 2 years of flexible lock-in.

What can be bought?

– Stocks from the universe that comprise the BSE-100 or CNX-100,

– Shares of listed Navratna, Maharatna and Miniratna public sector enterprises – Click here to see which stocks fall into this category,

– Initial Public Offerings (IPOs) of PSUs with turnover more than Rs 4,000 crore and where the government shareholding pattern is at least 51%,

– Units of Exchange Traded Funds (ETFs) or mutual fund schemes investing in RGESS eligible shares provided these units are listed and traded on the stock exchange and settled through the depository mechanism.

As per regulations, the initial offering period of any mutual fund should not be more than 15 days. But schemes eligible under RGESS have it extended right up to 30 days.

Note :-

* As Per Section 10 (38)

“equity oriented fund” means a fund—

(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than 91% of the total proceeds of such fund; and

(ii) which has been set up under a scheme of a Mutual Fund specified under clause 10(23D)

To view List of Eligible Shares / Mutual Funds / ETFs under RGESS please click the link given below