Are RGESS eligible mutual fund schemes a worthy investment?

The Government of India introduced Rajiv Gandhi Equity Savings Scheme (RGESS) in the previous Union budget 2012-13, and is targeted towards attracting the new retail investors into equity markets. Through RGESS the new first time investor can claim tax saving benefit on his investment up to Rs.50,000/- in eligible securities under section 80 CCG.This benefit can be availed in addition to deductions available u/s Sec 80C.

The objective of the RGESS is to encourage flow of savings in the financial instruments and improve the depth of the domestic capital market.

In December 2012, the Securities Exchange and Board of India (SEBI) pronounced norms for investing in RGESS. It clarified which securities would be eligible for availing tax benefit under the aforesaid scheme.

Five facts about Rajiv Gandhi Equity Savings Scheme :

The Rajiv Gandhi Equity Savings Scheme (RGESS) has been officially notified and will be launched by Finance Minister P Chidambaram this week. ET Wealth explains what you should consider before opting for this tax-saving option available under Section 80CCG.

Who is eligible?

RGESS is available to all resident individuals whose gross total income is less than Rs 10 lakh and who are investing in equity for the first time. A first-timer has been defined as the one who has not opened a demat account as a 'first holder' before the notification date of 23 November 2012, even if his name appears in a joint demat account opened before this date. The investor who has opened a demat account as first holder before the notification date but has not bought any shares or traded in the futures and options segment will also be considered as a first-time investor.