RAJIV GANDHI EQUITY SAVINGS RAJIV GANDHI EQUITY SAVINGS SCHEME (RGESS) - 2013SCHEME (RGESS) - 2013

WHAT IS RGESS ? Rajiv Gandhi Equity Saving Scheme (RGESS) is a

new initiative by the government of India aimed encouraging first time investors to channelize.Their savings into the capital markets.

As an incentive, a one-time deduction will be available to the new retailinvestor on the 50% of the amount invested in ‘eligible securities’ in the financial year, subject to maximum investment limit of Rs 50,000.

For the purpose of claiming benefit under RGESS, the investor needs to invest in select approved securities as notified by the government.

WHICH SECURITIES I CAN INVEST?

Equity shares included in the NSE CNX-100 & BSE-100.

Equity shares of PSU categorized as Maharatna, Miniratna or Navratna.

Units of ETFs & MFs with eligible securities as underlying and provided.They are listed and traded on a stock exchange and settled through a depository mechanism.

FPO or NFOs of above eligible securities. IPO's of PSUs with atleast 51% government holding

and 3 year annual turnover of more than Rs. 4000 corer.

TAX BENFITS:TAX BENFITS:

Tax Benefit u/s 80CCG – deduction from total Tax Benefit u/s 80CCG – deduction from total income. income.

Deduction of 50% of amount invested. Deduction Deduction of 50% of amount invested. Deduction not to exceed Rs. 25,000.not to exceed Rs. 25,000.

Deduction permitted 3 years.Deduction permitted 3 years.

TAX BENEFITS :ILLUSTRATION FOR FY 2013-14

Particulars Particulars A’S TAXABLE INCOME A’S TAXABLE INCOME B’S TAXABLE INCOME B’S TAXABLE INCOME

Salary income PA Salary income PA 500000500000 500000500000

Tax Exeamtion as 2012Tax Exeamtion as 2012 200000200000 200000200000

Tax payable Tax payable 300000300000 300000300000

Less: Deductions U/s Less: Deductions U/s 80C(LIC etc) 80C(LIC etc)

100,000100,000 1,000,0001,000,000

Total taxable income Total taxable income ( Tax payble - ( Tax payble - Deductions)Deductions)

200,000200,000 200000200000

Less: Deductions RGESS Less: Deductions RGESS U/S 80CCG U/S 80CCG

25,00025,000 00

Total taxable income Total taxable income 175,000175,000 200,000200,000

Tax payable Tax payable 17,50017,500 2000020000

Next tax saved - 2013Next tax saved - 2013 2,5002,500   

Next year - 2014Next year - 2014 2,500  Next year - 2015Next year - 2015 2,500   3 YEARS SAVED3 YEARS SAVED 7,500  

PROCEDURE FOR NEW INVESTORSPROCEDURE FOR NEW INVESTORS::

••Open a demat account with RGESS Open a demat account with RGESS

••Open a broking account .Open a broking account .

••Provide PAN while opening account. Provide PAN while opening account. ••Submit declaration in Form A to DPSubmit declaration in Form A to DP . .

PROCEDURE FOR EXISTING PROCEDURE FOR EXISTING INVESTORSINVESTORS::

••Designate existing demat account for RGESS .Designate existing demat account for RGESS .

••Open a broking account, if not opened Open a broking account, if not opened

••PAN compliant account.PAN compliant account.

••Submit declaration in Form A to DP.Submit declaration in Form A to DP.

PROCEDURE FOR RGESS PROCEDURE FOR RGESS INVESTMENT:INVESTMENT:

Investment through Exchanges .Investment through Exchanges . More than one transaction permitted in a financial year.More than one transaction permitted in a financial year. Valuation provided by Exchanges .Valuation provided by Exchanges . Eligible Securities upto Rs. 50,000 kept under lock-in by Eligible Securities upto Rs. 50,000 kept under lock-in by

CDSL.CDSL. Declaration in Form B by investor:Declaration in Form B by investor:••Exclude credit of RGESS securities from RGESS portfolio .Exclude credit of RGESS securities from RGESS portfolio .••Date of trading and Security name mentioned .Date of trading and Security name mentioned .••All credits received for settlements on date of trading All credits received for settlements on date of trading

excluded from RGESS portfolio excluded from RGESS portfolio Investment in other securities / in excess of Rs.50000 Investment in other securities / in excess of Rs.50000

can be held in RGESS account - but not eligible for tax can be held in RGESS account - but not eligible for tax benefit benefit

PROCEDURE FOR RGESS PROCEDURE FOR RGESS INVESTMENT:INVESTMENT:

Declaration in Form B by investor –Declaration in Form B by investor –• • Exclude credit of RGESS securities from RGESS portfolio Exclude credit of RGESS securities from RGESS portfolio • • Date of trading and Security name mentioned Date of trading and Security name mentioned • • All credits received for settlements on date of trading All credits received for settlements on date of trading

excluded from RGESS portfolio excluded from RGESS portfolio • • To be submitted within one month of date of To be submitted within one month of date of

transaction transaction

Investment in other securities / in excess of Rs.50000 Investment in other securities / in excess of Rs.50000 can be held in RGESS account - but not eligible for tax can be held in RGESS account - but not eligible for tax

benefitbenefit

LOCK-IN PERIOD:

Fixed lock-in of one year •from the date of credit

Flexible Lock-in of two years : 2 years from the end of Fixed lock in period

FIXED LOCK-IN:FIXED LOCK-IN:

Valuation provided by exchange on the basis of Valuation provided by exchange on the basis of contract price.contract price.

Securities under lock-in after receipt of valuation Securities under lock-in after receipt of valuation from Exchange from Exchange

Investor cannot sell .Investor cannot sell . Information to investor through CDSL web based Information to investor through CDSL web based

facilityfacility Valuation of RGESS portfolio Valuation of RGESS portfolio Annual statement of RGESS portfolio Annual statement of RGESS portfolio Credit received through Corporate Action Credit received through Corporate Action Considered for RGESS portfolio Considered for RGESS portfolio

FELXIABLE LOCK-IN:FELXIABLE LOCK-IN:

Permitted to trade subject to being compliant for minimum Permitted to trade subject to being compliant for minimum 270 days in 270 days in each each flexible lock in year flexible lock in year

Compliance conditions: Compliance conditions: ••Maintenance of value of RGESS portfolio = > Amount claimed as Maintenance of value of RGESS portfolio = > Amount claimed as

RGESS investment RGESS investment ••Fall in value of RGESS portfolio Fall in value of RGESS portfolio ••Due to market fluctuations without any sale-Compliant Due to market fluctuations without any sale-Compliant

Fall in value of RGESS portfolio Due to sale:Fall in value of RGESS portfolio Due to sale:••Compliant till date of sale Compliant till date of sale ••After date of sale – After date of sale – ••RGESS portfolio value = Amt claimed as RGESS investment RGESS portfolio value = Amt claimed as RGESS investment ••OR OR ••RGESS portfolio value = Value of RGESS portfolio before sale RGESS portfolio value = Value of RGESS portfolio before sale ••WHICHEVER IS LESS WHICHEVER IS LESS

FLEXIBLE LOCK-IN – COMPLIANCE FLEXIBLE LOCK-IN – COMPLIANCE CONDITIONS:CONDITIONS:

RGESS portfolio valued at closing price on previous date of debit:

Portfolio Portfolio Securities which were under fixed lock-in Securities which were under fixed lock-in Securities which are RGESS eligible on the valuation date Securities which are RGESS eligible on the valuation date

( even though not under fixed lock-in) ( even though not under fixed lock-in)

Sale of RGESS securities :Sale of RGESS securities :

Securities which were under fixed lock-in .Securities which were under fixed lock-in . Securities which were considered for valuation of portfolio Securities which were considered for valuation of portfolio

in flexible lock –in period .in flexible lock –in period .

FLEXIBLE LOCK-IN: COMPLIANCE CONDITIONS:

RGESS PORTFOLIO RGESS PORTFOLIO SCRIPSSCRIPS

RGESS PORTFOLIO RGESS PORTFOLIO VALUEVALUE

ACC-500 shares ACC-500 shares Fixed lock inFixed lock in Rs. 50,000Rs. 50,000

ACC-200 sharesACC-200 shares -- Rs. 20,000Rs. 20,000

SOLD-ACC 100 sharesSOLD-ACC 100 shares Fixed lock inFixed lock in

ACC sharesACC shares -- Rs .60,000Rs .60,000

EFFECT OF NON –COMPLIANCE:EFFECT OF NON –COMPLIANCE:

Deduction claimed will be withdrawn Deduction Deduction claimed will be withdrawn Deduction amount claimed for a previous year .amount claimed for a previous year .

Deemed to be income of the assesse of such Deemed to be income of the assesse of such previous year .previous year .

Liable to tax .Liable to tax .

Expectation from DPsExpectation from DPs : :

Verification by IT Dept / SEBI / CDSL inspection.Verification by IT Dept / SEBI / CDSL inspection. Maintenance of Form A and Form B.Maintenance of Form A and Form B. DP to inform BOs if found ineligible. DP to inform BOs if found ineligible.

Information to BO about RGESS ineligibility. Information to BO about RGESS ineligibility. CDSL will provide report to DPs. CDSL will provide report to DPs. Annual statement of investment and trade to Annual statement of investment and trade to

RGESS investor. RGESS investor.

FLEXIBLE LOCK-IN – COMPLIANCE FLEXIBLE LOCK-IN – COMPLIANCE CONDITIONSCONDITIONS::

Off market credits not considered for RGESS Off market credits not considered for RGESS investment.investment.

Opt for client level payout / transfer from Clearing Opt for client level payout / transfer from Clearing Member (CM) account.Member (CM) account.

If credit given to RGESS BO from a CM Ben a/c or If credit given to RGESS BO from a CM Ben a/c or CM Margin a/c. CM Margin a/c.

Link CM ID to such CM Ben a/c or CM Margin a/c .Link CM ID to such CM Ben a/c or CM Margin a/c .Enter settlement number while executing such Enter settlement number while executing such

transaction.transaction.

CDSL’ s PROPASED WEB BASED CDSL’ s PROPASED WEB BASED FACILITY:FACILITY:

Information to investorInformation to investor:: Valuation of RGESS portfolio.Valuation of RGESS portfolio. Annual statement of RGESS portfolio .Annual statement of RGESS portfolio . Annual statement of trade and compliance status Annual statement of trade and compliance status

during flexible lock-in.during flexible lock-in. Above information available to DPs for all its Above information available to DPs for all its

RGESS BOs. RGESS BOs.

THANK YOUTHANK YOU

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