Rajiv Gandhi Equity Savings Scheme (RGESS) {राजीव गांधी इक्विटि बचत योजना}

The Rajiv Gandhi Equity Savings Scheme (RGESS) was announced in the Union Budget in 2012-13 and further extended in 2013-14. This scheme is a tax saving scheme. This scheme is launched especially for new investors who have little or no experience in the securities market as well as who have their gross income per year below a certain amount. The income ceiling when this scheme was started was placed at INR 10 lakh in 2012-13. After that, this amount was raised to INR 12 lakh in the year 2013-14. For the three consecutive assessment years, the investors can get a 50 per cent deduction of the amount that is invested during the year, with up to a maximum of INR 50,000 investment per financial year according to the Section 80CCG of the Income Tax Act.


The benefits of the Rajiv Gandhi Equity Savings Scheme are mentioned below:

  • There was introduced a tax benefit of Deductions with respect to investment under the Rajiv Gandhi Equity Savings Scheme by the Income Tax Act, 1961, Section 80CC. This benefit can be available for the new retail investors with investments up to INR 50,000 in Eligible Securities. The investor must have a total gross income of INR 12 lakh or less than it.
  • The 50 per cent deduction of the invested amount from the income that is taxable for the current year under Section 80CCG. This benefit will be provided in addition to the deduction that is available under Section 80C.

The Purposes

The main aim of the scheme to launch is to bring about financial inclusion and financial steadiness as well as to expand the base of retail investors in the securities markets of India. This scheme will also encourage the improvement of the domestic capital markets with the flow of savings and to give rise to the customs of equity investments in the country.

Eligibility Criteria

The tax deduction under this scheme will be provided only to those new retail investors who will fulfil the following eligibility criteria of the scheme:

  • The only Retail investors can apply under this scheme who are Residents of India.
  • The investor who wants to apply for this scheme does not have any history of trading in the derivatives market and equity market.
  • The investor must have to follow the agreement with the scheme.
  • The investor must have a total gross income of INR 10 lakh or less than this for the financial year.
  • The investments under this scheme can only be made in those companies that belong to BSE-100 or CNX-100 as well as their follow-on public offers.
  • The investor has to make only in IPOs of PSU with 51 per cent or more government holding.
  • The investments under this scheme can be made only in Mutual Fund or Exchange Traded Fund Schemes because they invest in RGESS eligible securities and their “New Fund Offers” (NFO).
  • The investments can only make in PSUs that are selected as Maharatna, Navratna or Miniratna and their Follow-on Public Offers.

Documents Required for RGESS

The applicants have to submit the following documents with the prescribed account opening form. All the documents needed to submit mentioned below:

  • The applicant has to submit Self-attested copy of PAN card and copies of passport size photograph.
  • Copies of all the required documents that are submitted by the applicant must be self-attested and accompanied by originals for the verification process. 
  • The applicants have to submit Proof of Identity, and for this, they can submit Passport, Voter ID Card, Driving license, PAN card with photograph, Aadhaar (Unique ID) letter.
  • The applicant has to submit Proof of Address (POA), and for this, the applicant can submit a Ration card, Passport, Voter ID Card, Driving license, Bank passbook.
  • The applicants can also submit Verified copies of utility bills like electricity bills, gas bills or Residence Telephone bills, registered lease or sale agreement of residence / Flat Maintenance bill/insurance copy for identity proof.
  • The applicant has to submit a Bank account statement and passbook.

Minimum Eligible Investment

This can be excellent news for the investors as there is no minimum eligible investment amount under this scheme. The investor can invest as per his choice.

Investment through RGESS

Investors can make investments in RGESS with their DEMAT account. All the eligible securities that are bought through a DEMAT account will be automatically locked-in during the first year of the investment. Under this scheme, the investor does not have the right to sell or hypothecate or pledge any eligible security during this lock-in period. When the fixed lock-in period is over the investor is allowed to trade these securities but under various conditions.

Investment limit in Rajiv Gandhi Equity Savings Scheme

In the first year, investors are allowed to invest as many times as they like. The investments that will be made by the investor in the following years do not succeed for tax exemptions.

Tax Implications

  • The investor can get tax benefits on a maximum of INR 50,000 eligible investment, and this is valid only for the first year.
  • For the 50 per cent of the invested amount, the deduction of Tax will be a maximum of INR 25,000.

Loss of Tax Benefits

If the investor withdraws the invested amount and it falls below the entry of the amount for which you required tax exemption for the locked-in period, then the investor may lose his tax benefits. If you fail or do not succeed to obey or to fulfil any of the provisions of the scheme then also you will not get Tax Benefits.

Risks Involved

This scheme also has subject to market risk same as other investment that is made in the capital markets. But the unsystematic risk can be eradicated substantially by expanding the investment base. As it is already mentioned that this investment scheme is subject to market risk, so the investor must understand what exactly these risks are and to what point it can impact you. You must seek sound financial advice before proceeding to invest. If you want more details on investments in the capital markets, then you can visit Clear Tax.

Frequently Asked Questions

Q: If someone is a non-resident Indian, then he or she is eligible for RGESS?

The scheme is for an individual who has resided in India as per the provisions of the Income Tax Act. So no other investor can apply under this scheme.

Q: When will someone get the allotment for RGESS mutual fund?

Allotment of units for RGESS mutual fund schemes will be completed within 15 days from the conclusion of the NFO period.

Q: If someone belongs to PAN exempt category like Sikkim then Can he or she open an RGESS account without PAN?

PAN is made mandatory to get the benefits of this scheme even if you belong to the PAN exempt category.

Q: What is the mode for holding eligible securities?

The mode of holding eligible securities under the scheme will be in a ‘Demat account’.

Q: How someone can open a Demat account?

The person can open a Demat account with any Depository Participant (DP) of CDSL.

Q: Who is eligible for this scheme?

The scheme is available for all New Retail Investors who have gross total income Rs. 12 lakh or less than it.