A new way to Save Tax in India
Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity tax advatnge savings scheme for equity investers in India. Only direct equity investments in equity will be eligible for tax deductions, and not the Mutual fund investments.
All new retail investors are allowed to invest up to Rs 50,000 directly in equities, an income tax deduction of 50 per cent. The scheme would have a lock-in period of three years and churning of portfolio is not permitted during the first one year. The scheme can be availed only once in a lifetime.
As proposed, this scheme will allow small investors to purchase shares only in the top 100 stocks traded on BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
The investors will likely be offered a 'no frills' demat account to encourage them getting started without worrying about the hefty annual charges for maintaining a DEMAT account, which varies from Rs.500 to Rs.1000.
The final details of the scheme will be announced by may.
Example:
If you invest Rs.50,000 in RGESS then Rs.25,000 will be deducted from your taxable income. So you may save about Rs.2,500, Rs.5,000 and Rs.7,500 for slabs 10%, 20% and 30% respectively under this scheme
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