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Rajiv Gandhi Equity Savings Scheme (RGESS)

Posted @ March 18, 2013, 12:00 am under (Payroll Outsourcing & Taxation)

Rajiv Gandhi Equity Savings Scheme (RGESS)


The Rajiv Gandhi Equity Savings Scheme Scheme is designed for only the first time new investors. Since they can be ‘new’ only in the first year of entering the market, the benefits of the Scheme is limited to only one year for a particular beneficiary, i.e., the tax benefit can be availed of only to the extent of investments made in a single financial year in which the investor makes the first RGESS eligible investment after opting for the RGESS account.


Conditions to avail deduction under Rajiv Gandhi Equity Savings Scheme (RGESS)


  1. RGESS is available to all resident individuals whose gross total income is less than Rs 10 lakh.
  2. Who are investing in equity for the first time. A first-timer has been defined as the one who has not opened a demat account as a 'first holder' before the notification date of 23 November 2012, even if his name appears in a joint demat account opened before this date. Who has also not done any trading in the derivative segment till RGESS account opening date. The investor who has opened a demat account as first holder before the notification date but has not bought any shares or traded in the futures and options segment will also be considered as a first-time investor. In case of joint accounts, only the first account holder will be considered as the existing retail investor.
  3. The new retail investor will have to submit a declaration, as in Form ‘A’, to the Depository Participant (DP) at the time of account opening or designating his existing demat account for taking the benefits under RGESS.
  4. Eligible securities, which are brought thereafter into such an account, will be automatically subject to lock-in up to a value of Rs. 50,000, unless the investor specifies otherwise through the Form ‘B’ specified in this regard.
  5. The investment options under the scheme will be limited to the following categories of equities:

    Listed equity shares

  1. The top 100 stocks at NSE and BSE i.e., CNX-100 / BSE -100 (This does not mean that one has to trade through NSE or BSE only. If the securities constituting BSE 100 or CNX 100 are listed and traded in any new stock exchange that may come up on a later day, the same will be eligible for RGESS.)
  2. Stocks of public sector enterprises which are categorized by the Government as Maharatna, avaratna and Miniratna.
  3. Combinations of stocks in (a) and /or (b) which are listed and traded on a stock exchange and settled through a depository system (e.g. Exchange Traded Funds (ETFs)or Mutual Fund (MF) schemes with RGESS eligible securities as mentioned in (a) and / or (b) as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism).
  4. Follow-on Public Offers (FPOs) of (a) and (b)
  5. New Fund Offers (NFOs) of (c) above
  6. Unlisted equity shares Initial Public Offers (IPOs) of PSUs, which are scheduled to get listed in the relevant financial year and where the government holding is at least 51% and whose annual turnover is not less than Rs. 4000 cr. for each of the immediate past three years.





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