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RGESS - Invest and save tax

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Equity markets are a great medium to build wealth over the long term. It could be called 'weapons of mass financial inclusion' in the context of a country's economic prosperity.


India has a low tax rate of 15% on short-term capital gains, zero tax on long-term capital gains from stock market investments, dividends are tax free in the hands of investors, and tax deductions are allowed for select equity linked mutual fund schemes. This is because the government acknowledges the crucial role of stock markets in capital formation and nation building. And it also has successfully tapped the market to raise money through divestments in PSUs. Sops have been extended in the stock market to encourage retail participation and build a sustainable equity culture. In this bid, the government has made another significant move by introducing Rajiv Gandhi Equity Savings Scheme (
RGESS).


RGESS aims to pave the way for mass financial inclusion, to be driven by the country's stock market, an investment avenue that for long much of India's population has hopelessly refrained from. Currently, only 3-4% of Indian household savings is invested in equities as against the 42% in the US and 14% in China. We can well imagine the scope and size of the desired financial inclusion before us.


It is important to know the provisions of RGESS before you get ready to avail of the perceived benefits.


For one, a new section 80CCG has been introduced to allow a tax deduction of 50% on a maximum investment of Rs 50,000 by new retail investors with annual income of up to Rs 10 lakh. The tax benefit is over and above the existing exemption of Rs 1 lakh under section 80C.


Investors in RGESS can invest in both primary and secondary market stocks that are either part of CNX 100 or BSE 100, PSU's categorised as Maharatna, Navratna or Miniratna and exchange-traded funds (
ETFs) linked to eligible securities. On the mutual fund side, there are about 11 schemes from seven fund houses which have already been approved by Sebi that qualify for RGESS investments by retail investors. As an investor, you need to submit a declaration in form A for designating a demat account for RGESS, which you can get from any registered broker. The holding period of your RGESS investment is three years. During the first year, known as fixed lock-in, you cannot pledge or sell the shares purchased. In the next two years, known as flexible lock-in, you can sell and buy other eligible securities or ETFs, maintaining the value of investment originally made for a cumulative period of 270 days during the two years. You are eligible only if you haven't traded in equity or derivative segments before November 23, 2012, which makes you a new investor as per the RGESS scheme.

Happy Investing!!

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You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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