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Investing in equity shares is always beneficial for individuals who wish to earn wealth over a period. To keep this demand intact, the Central Government launched the Rajiv Gandhi equity saving scheme.
This scheme offers inducements to individuals who invest in the equity market. In addition, it helps investors save significantly on taxes and contribute to India’s domestic capital market.
Keep reading to learn more about this scheme and its exemptions.
Section 80CCG helps equity market investors by offering tax exemptions on investments. Individuals who invest their funds in the equity market with a 3-year lock-in period are eligible for this scheme.
Introduced in the Finance Act of 2012, the Rajiv Gandhi Equity Saving Scheme aimed to boost investments in the securities market. It encourages both existing and new investors to try financing in the equity market.
Through this scheme, the Central Government targets growth in socio-economic practises in Indians. For instance, the method of saving, expanding the investors base, boosting the capital market beyond the fixed investors, promoting equity trading among youth, etc.
However, to gain the benefits of investment under 80CCG, individuals have to fulfil the eligibility parameters.
There are specific criteria set by the Central Government that need to be fulfilled by applicants to claim benefits under 80CCG.
Eligible candidates should check the available deduction under Section 80CCG. This will help individuals understand the concept better.
First-time equity market investors can claim tax exemptions under Section 80CCG. Ideally, individuals with a Demat account who haven’t invested in derivative transactions can gain 50% deductions on their investment.
To increase the benefit scale under the 80CCG investment scheme, individuals should know the eligible investments.
Individuals can claim deductions for the following investments under Section 80CCG.
Apart from checking investments applicable for deduction under 80CCG, individuals should study how to claim the benefits.
Individuals have to open a Demat account to start investing in the equity shares. Then, they can follow the mentioned steps to claim deductions under the RGESS scheme.
Individuals should know that the securities bought via Demat account get locked in during the first year. However, investors aren’t allowed to sell these shares during the lock-in period.
After the completion of the lock-in period, individuals can start trading these securities.
Individuals should know that the 80CCG deduction limit is up to ₹50,000. Therefore, anything above the mentioned amount isn’t taxable.
For example, an individual invests ₹50,000 in an equity scheme. Being a first-time investor, he/she is eligible to claim tax exemptions up to 50% which comes to ₹25,000.
Now the applicable taxation under Section 80CCG reduces the taxable amount by ₹25,000.
This is the relevant information on the Rajiv Gandhi equity saving scheme and the applicable deductions.
However, individuals should know that the scheme has been phased out since April 2017. The investments made in 2017-2018 are eligible for this scheme benefits.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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