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RGEES Presentation
The document provides information about the Rajiv Gandhi Equity Savings Scheme (RGESS), which was launched in 2012 by the Union Finance Minister to encourage new equity investors. Some key points: - RGESS allows new individual investors to claim a tax deduction of up to Rs. 50,000 on investments in equities. - There is a 3-year lock-in period on investments made under RGESS. Eligible securities include stocks listed on the BSE 100 or CNX 100 indices and units of mutual funds. - To qualify, investors must be new to equities, have a demat account, and have an annual income of less than Rs. 12 lakhs. Gains from
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RGEES Presentation
- 1. Rajiv Gandhi EquitySavings Scheme • Prasad Surve • Akash Dhar • Khusboo Shah • Rekha Goyal • Prasad Kadam • Harishyam Sharma
- 2. What is RGESS? o Launched on September 21, 2012 by Union Finance Minister, Shri. P. Chidambaram. o New Scheme for Equity Investors. o Falls under the Income Tax Act 80CG. o Fund Houses Offering RGESS scheme: SBI RGESS Fund IDBI RGESS Fund UTI RGESS Fund HDFC RGESS Fund Birla Sun Life RGESS Fund DSP BR RGESS Fund LIC Nomura RGESS Fund
- 3. Features of RGESS oIs only for new investors with a benefit of Tax deduction o Benefit on Investment up to Rs. 50,000 o Lock in period of 3 years from the date of investment o Can be availed only once in a lifetime
- 4. Who can Invest? o Any non investor in equity shares o Any new investor with a demat account o An individual whose gross income for the year is not more than 12 lakhs.
- 5. How to Invest? o Opening a demat account and by submitting the duly signed 'Form A', o Investing in eligible mutual funds or stocks in lump sum.
- 6. Where to Invest? o Listed Equity shares only. o Following are the eligible securities for investment: Equity shares, which are part of BSE 100 and CNX 100 indices Equity shares of public sector enterprises categorized with Maharatna, Navratna or Miniratna. Units of exchange-traded funds (ETFs) or Mutual Fund (MF) schemes New fund offers (NFOs) Public Offer in a public sector co. where govt. hold atleast 51% stake, and whose turnover should not be less than 4000 crores in the past three years.
- 7. Pros of investingin RGESS o Tax exemption upto 50% of the investment amount. o Gains out of RGESS can be released in a year o Provision of investment in installments. o Dividend payments are tax free. o Helps in financial inclusivity. o Transfer of funds from banks to capital markets
- 8. Cons of investingin RGESS o Lock in period of 3 years o Restricted only to individual bodies, firms or companies o Discourages normal form of investment. o For people whose annual income is not more than Rs.12 Lakhs.
- 9. Rs. 25,000 Rs. 70,000 1st Rs.50,000 Endofyear 50% Rs. 5,000 20% Rs. 70,000 2nd Rs. 30,000 3rd Sale Rs.40,000 Securitiesarenowfreelytransferrable Investment Case Study
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Editor's Notes
- #2 Hello and welcome here, we are here presenting here a govt. tax savings scheme called RGESS (Rajiv Gandhi Equity Savings Scheme).The main aim of this scheme is to encourage the savings of small investors in the domestic capital markets
- #3 So to start with what is RGESS ??It was launched on 21 sept 2012, by our Finance Minister P ChidambaramThis is the first scheme in india, which was launched to attract new investors into investing into equity capitalIt falls under theSection 80CG of the Income Tax Act.There are various fund houses listed which offer RGESS which are as follows.(refer table)
- #4 Lets look at the some of the important features of RGESS:It is only for new investors which gives a tax deduction of 50% of investment amountOne can only avail benefit upto 50,000 of the investment amount.There is a lock in period in RGESS where the investor is not allowed to sell the securities until first year of investment due to Fixed lock in, but from second year onwards the investor can buy or sell securitiesThis scheme can only be availed once in a life time.
- #5 The question arises who can invest ??? Into this scheme.Now there are some guidelines as to who are the eligible to invest: Any individual who has never invested into equity shares can invest Any new investor with a demat account can invest and an individual whose gross income for the year doesn’t exceed 12 lakhs is eligible to invest into RGESS.And Bodies like firm or a company are not allowed to invest in this scheme as it is open for individuals only.
- #6 Now how should a eligible investor proceed in investing in RGESSThe individual has to open a demat account and designate the demat account for RGESS by submitting a duly signed ‘Form A’ which is available with brokerage houses.You can also invest in mutual funds in lump sum sort in installments in the year where deduction is to be claimed, though the amount for tax benefit will only be available upto an amount of 50,000
- #7 It is recommended to invest only in equity shares so as to avail the Tax benefit that the scheme offers.So there are certain selected eligible securities for RGESS:Equity shares which are a part of the BSE100 and CNX 100 indicesShares of public sector companies which are categorized with Maharatna, Navratna or Miniratna.ETF that’s is Units of Exchange Traded funds or Mutual fund schemesAny New Fund OffersPublic offer in a public sector where govt. has stake of atleast 51% and whose annual turnover must not be less than 4000 crores in the past 3 years.
- #8 Lets look at the advantages of investing in RGESSYou get a tax exemption 50% on the investment amount.Unlike other tax saving schemes gains outy of RGESS can be released within a year itself.Investment can be made in installments for the year in which tax claim are filled.Dividend payments are made tax free.The scheme has a long run benefit of educating retail investment and thereby moving towards financial inclusivity in the country.The success of this scheme will lead to transfer of assets from savings deposits and FD’s to capital markets.
- #9 With advantages we also have some cons attached to this scheme:There is a lock in period of 3 years in which the investor is required to maintain the minimum amount required for tax benefitAs investment is restricted only to individuals, firms or companies cannot leverage its benefitsOnly new investors are allowed to invest, hence existing investors cannot leverage its benefits therefore, discouraging normal form of investment. Only restricted to certain range of people whose annual income is not more than Rs.12 Lakhs.