- RGESS scheme is introduced under the new Section -80CCG- of the Income Tax Act, 1961.
- Scheme is open only to newcomers to equity market. This will be ensured from the PAN numbers. This includes those who have opened the Demat account but have not made any transaction in equity / derivatives till the date of notification of this Scheme. This includes also those account holders other than the first account holder who wish to open a fresh account.
- Only for those whose annual income is up to Rs. 10 lakh.
- Maximum Investment permissible under the Scheme is Rs. 50,000.
- Investor would get a 50% deduction of the amount invested from the taxable income for that year.
- Investment should be in stocks listed under the BSE 100 or CNX 100, or Navratna, Maharatna or Miniratna PSU stocks. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPOs of PSUs, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 cr for each of the immediate past three years, would also be eligible.
- Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying are also eligible under RGESS.
- Investments in installments are also permitted.
- A lock-in period of three years will be applicable including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.
- After the first year, investors would be allowed to trade in the securities in furtherance of the goal of promoting an equity culture and as a provision to protect them from adverse market movements.
- Investors would, however, be required to maintain their level of investment during these two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The calculation of 270 days includes those days pursuant to the day on which the market value of the residual shares /units has automatically touched the stipulated value after the date of debit.