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.
