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Today was a good day for Retail investors as some good news came from Finance Minister P. Chidambaram regarding RGESS for small investors. He declared that in this budget he would make Rajiv Gandhi Equity savings scheme more attractive for small/retail investors, a move that would help bringing more first time investors to the Mutual funds/equity market.
He said the ministry will revisit the tax incentive section in the scheme to address investor concerns. Chenges would also be implemented for converging KYC norms for different financial sector regulators so that retail participation becomes seamless in the financial instruments. Major advantage of investing in RGESS is that The scheme would provide a 50 % tax deduction on investments up to Rs 50,000 to investors whose annual taxable income is below Rs 10 lakh.
Investors can invest in this scheme through mutual funds and exchange traded funds and the investments would be locked-in for a total of three years. People can also directly invest in shares of stocks listed under BSE 100 or CNX 100 or those of PSUs which are Navratnas, Maharatnas and Miniratnas. Investment in follow-on offers of these companies would also be eligible for tax deduction. Investor should check the list of approved Mutual Funds for this scheme and invest accordingly, but please remember - "Mutual funds investments are subject to market risks" so you can save few bucks in tax but can loose in stock market investment, It would turn out to be good scheme for experienced investors but might turn out to be not so good option for those who invest for just saving tax.
The scheme would be open to retail investors who have opened demat accounts but have not made any transactions in equity or derivatives till the notification of the scheme. With this, all those opening fresh accounts would also be eligible to participate in RGESS.
He said the ministry will revisit the tax incentive section in the scheme to address investor concerns. Chenges would also be implemented for converging KYC norms for different financial sector regulators so that retail participation becomes seamless in the financial instruments. Major advantage of investing in RGESS is that The scheme would provide a 50 % tax deduction on investments up to Rs 50,000 to investors whose annual taxable income is below Rs 10 lakh.
Investors can invest in this scheme through mutual funds and exchange traded funds and the investments would be locked-in for a total of three years. People can also directly invest in shares of stocks listed under BSE 100 or CNX 100 or those of PSUs which are Navratnas, Maharatnas and Miniratnas. Investment in follow-on offers of these companies would also be eligible for tax deduction. Investor should check the list of approved Mutual Funds for this scheme and invest accordingly, but please remember - "Mutual funds investments are subject to market risks" so you can save few bucks in tax but can loose in stock market investment, It would turn out to be good scheme for experienced investors but might turn out to be not so good option for those who invest for just saving tax.
The scheme would be open to retail investors who have opened demat accounts but have not made any transactions in equity or derivatives till the notification of the scheme. With this, all those opening fresh accounts would also be eligible to participate in RGESS.
