Comparison of RGESS Vs.ELSS Vs.PPF


A new way to Save Tax in India

Effective 1 April 2013, investors with a gross total income of up to Rs.12 lakh can invest in RGESS, up from an earlier income limit of Rs.10 lakh. Investors can park funds in MFs and listed shares and extended tax benefits to three successive years.

Who can invest in RGESS?
New retail investors with an annual income of less than 10 lakhs.
How much can I invest?
The maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.
Tax Benefit
Deduction u/s 80 CCG, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.
Lock-in Period
3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.

AIM: To encourage the savings of the small investors in domestic capital market.

Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity tax advantage savings scheme for equity investors in India. The scheme got it's approval on September 21, 2012. It is exclusively for the first time retail investors in securities market.
The investors who invest up to Rs.50,000 in 'Eligible Securities' and have gross total annual income less than or equal to Rs.10 Lakhs will benefit from a new section 80CCG under the
Income Tax Act, 1961 on 'Deduction in respect of investment under an equity savings scheme' has been introduced to give tax benefits.

Example:
Let us say, you invest Rs.50,000 under RGESS, the amount eligible for tax deduction from your income will be Rs.25,000. Alternatively, if you invest Rs.40,000 under RGESS, the amount eligible for tax deduction will be Rs.20,000. So you may save about Rs.2,575, Rs.5,150 for income tax slabs 10% and 20% respectively under this scheme.

A quick comparison of RGESS with the top tax saving schemes available in India:-

RGESS
ELSS
PPF
Eligibility
Annual Income less than 10 lakhs.
None
None
Lock-in Period
1+2 Years
3 Years
15 Years
Tax Benefits
50% (80 CCG)
100% (80 C)
100% (80 C)
Maximum Investment for Deduction
Rs.50,000
Rs.100,000
Rs.100,000
Minimum Investment
NA
Rs.500 to 5000
Rs.500
Need for DEMAT
Yes
No
No
Equity Linked
Yes
Yes
No
Annual Return
Market Based
Market Based
8.8%
Interest Earned
Non Taxable
Non Taxable
Non Taxable
Risk
Medium to High
Medium to High
Low

 You need a PAN Card, Bank Account or optionally DEMAT account for equity linked schemes with all the schemes compared above.