RGESS,

ELSS AND NSC

Team 1
Presented by,
ELANGOMANI S
SASIKANTHAN C
KATHIRAVAN M
YUVARAJ M
PRIYADHARSHINI K
 RGESS

 Rajiv Gandhi Equity Savings Scheme or RGESS is a new equity tax advantage savings
scheme for equity investors in India.

 Rajiv Gandhi Equity Savings Scheme (RGESS) announced in Union Budget 2012-13 is
a new equity tax advantage savings scheme for equity investors in India.

 The scheme got it's approval on September 21, 2012. It is exclusively for the first time
retail investors in securities market.

 The Scheme not only encourages the flow of savings and improves the depth of
domestic capital markets, but also aims to promote an 'equity culture' in India.

 This is also expected to widen the retail investor base in the Indian securities market.
 ELIGIBILITY

 Resident of India

 Gross total income for the financial year less than or equal to Rs. 12 Lakh.

 In 2013-14, the income ceiling of the beneficiaries was raised to Rs. 12 lakh from Rs.
10 lakh specified in 2012-13.
 How the scheme works

 The RGESS is only for individuals who have not invested directly in

 Equities.

 including shares .

 Derivatives,

 If you have a demat account. But have not used it for transactions before the specified
date,

 you can avail of the RGESS benefits. Besides, only those whose gross annual income is
up to Rs 12 Lakhs can invest.
 How the taxation works

 Let us say, you invest Rs.50,000 under RGESS.

 The amount eligible for tax deduction from your income will be Rs.25,000.

 Let us say, you invest Rs.40,000 under RGESS.

 The amount eligible for tax deduction will be Rs.20,000.

 So you may save about Rs.2,575, Rs.5,150 for income tax slabs 10% and 20%
respectively under this scheme.
 Benefits
 The investor would get 50% deduction of the amount invested during the year, up to a
maximum investment of Rs.50,000 per financial year, from his/her taxable income for
that year, for three consecutive assessment years.

 It provides additional tax benefits over and above the present tax savings schemes under
the Income Tax Act.

 Investments are allowed to be made in instalments in the year in which the tax claims
are filed.

 Success of this scheme can lead to transfer of assets from traditional savings
instruments such as bank deposits

 Lock in period are flexible.

RGESS INVESTMENT INSTRUMENTS

 Equity Shares in BSE-100 or CNX 100

 Eligible FPOs & NFOs

 IPOs of eligible PSUs

 Units of eligible ETFs or MFs

 OVERALL VIEW OF RGESS
Who can invest in RGESS New retail investors with an annual gross
income of less than Rs.12 Lakhs.

How much can I invest The maximum amount eligible for claiming
benefit under RGESS is Rs. 50,000.

Tax Benefit The benefit is in addition to deduction

available u/s Sec 80C.

Lock-in Period
Total of 3 years. Fixed lock-in during first
year followed by a flexible lock-in for
subsequent two years.
 ALTERNATE PRODUCTS

 Equity linked Saving Scheme (ELSS)

 National Saving Certificate (NSC)

 Equity linked Saving Scheme (ELSS)

 Equity Linked Savings Scheme, popularly known as ELSS are

close-ended, lock-in period of 3 years diversified equity schemes
offered by mutual funds in India

 They offer tax benefits under the new Section 80C of Income
Tax Act 1961

 ELSS can be invested using both SIP(Systematic Investment

Plan) and lump sums investment options
 Types of ELSS

 Growth Fund is long-term wealth creation platform for investors where the full value
of the fund is realised at the time of redemption.

 Dividend Payout has two sub-categories – Dividend Payout and Dividend

Reinvestment. Under the Dividend Payout option, you will receive tax-free dividends.
In the case of Dividend Reinvestment, your dividends will be reinvested as a new
investment.
 ADVANTAGES

 Amount invested in an ELSS fund is available for a tax deduction to the extent of
₹150,000 for the current financial year under section 80C of the Income Tax Act

 ELSS has a lock-in period of only 3 years, as compared to minimum 5 years for
other tax saving options. This period is the lowest in comparison to other tax
saving options such as 15 years in a PPF or 5 years in a Fixed Deposit option.
Thereby ELSS provides higher returns with the lowest lock-in period.

 Since ELSS funds invest in equity schemes, the returns are higher (15-20%)
compared to other tax saving options (generally, 7-10%).

 Investment through SIP

 National Saving Certificate (NSC)

 The National Savings Certificate is a fixed income investment scheme that you can
open with any post office.

 Government of India initiative, it is a savings bond that encourages subscribers –

mainly small to mid-income investors – to invest while saving on income tax.

 The scheme is open only for Indian individual citizens.

 FEATURES OF NSC

 Fixed income:Presently, you get guaranteed returns (8% annual interest) and
can enjoy a regular income.
 Types: The scheme originally had two types of certificates – NSC VIII Issue
and NSC IX Issue. The Government discontinued NSC IX Issue in December
2015. So, only the NSC VIII Issue is open for subscription currently.
 Tax saver: As a government-backed tax-saving scheme, you can invest for up
to Rs 1.5 lakh to claim the benefits of 80C deductions.
 Start small: You can invest as small as Rs. 100 (or multiples of 100) as an
initial investment, and increase the amount when feasible.
 Interest rate:Currently, the rate of interest is 8%, which the government
revises every quarter. It gets compounded annually, but will be payable at
maturity.
 Maturity period: There are two maturity periods to choose from – one for 5
years and the other for 10 years.
 CONTINUATION

 Loan collateral: Banks and NBFCs accept NSC as a collateral or security for secured
loans. To do this, the concerned post master should put a transfer stamp to the
certificate and transfer it to the bank.
 Power of compounding: Interest you earn on your investment gets compounded and
reinvested by default, though the returns do not beat inflation.
 Nomination: Investor can nominate a family member (even a minor) so that they can
inherit it in the unfortunate event of the investor’s demise.
 Corpus after maturity: Upon maturity, you will receive the entire maturity value.
Since there is no TDS on NSC payouts, the subscriber should pay the applicable tax on
it.
 Premature withdrawal: Generally, one cannot exit the scheme early. However, they
accept it in exceptional cases like the death of investor or if there is a court order for it.
COMPARION OF RGESS,ELSS AND NSC
SCHEME INTEREST RATE MAXIMUM TENURE
INVESTMENT
AMOUNT
Total of 3 years. Fixed
RGESS Market linked Benefits upto 50,000 lock-in during first year
(15%-20%) followed by a flexible
lock-in for subsequent
two years.

ELSS Market linked No limit, tax benefit up 3 years of lock-in period

(15%-20%) to Rs 1.5 lakh

NSC 8.5% No limit, tax benefit up 5 and 10 years

to Rs 1.5 lakh
 REFERENCES

 https://cleartax.in/s/rgess
 https://cleartax.in/s/elss
 https://cleartax.in/s/nsc-national-savings-certificate
THANK YOU