The Rajiv Gandhi Equity Savings Scheme (RGESS), introduced by the government in current budget, has been notified the Central Board of Direct Taxes (CBDT). This scheme seeks to encourage small investors to channelise their savings into domestic capital markets.
RGESS has been framed consequent to the introduction of Section 80CCG in the Finance Act 2012. Under this scheme, only a one-time deduction will be available to a “new retail investor” i.e. one who has not invested in any equity, derivatives prior to the notification. The deduction will be available to a new retail investor who complies with the conditions of the scheme.
According to the scheme, investor’s gross total income should be less than Rs 10 lakh for the financial year, in which investments are made. Also, investor can avail maximum deduction upto Rs 50,000 in a financial year. The eligible securities can be held for three years with fixed lock-in of first year and a flexible lock-in period of two years. In the 'flexible lock-in' period, investors will be permitted to trade, subject to conditions.
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