What is RGESS scheme and how does it work?

  1. How do I enable RGESS on my demat account?
  2. Is there a lock-in period for RGESS?
  3. What is the max limit under RGESS and can I trade over and above the max limit?

RGESS Is a tax reduction scheme for the new retail investors only whose gross total income in a year is below 12 lakhs. The scheme was introduced in 2012.
RGESS is only for individuals who have not invested directly in equities, including shares and derivatives, before 23 November 2012
First-time investors can invest up to Rs. 50000 and claim a deduction of 50% of the invested amount up to a maximum of Rs.25000
You need to open a demat account with a broker for an account with NSDL or CDSL
If the investor has not transacted through a demat account, such an account can be designated as an RGESS account
A copy of the PAN card also have to be provided to the depository participant for designating the demat account for RGESS
The investor claims this deduction under sub section (1) of section 80CCG of the Income Tax Act, 1961
The RGESS investment has a lock-in period of 3 years
In the first year of investment, the investor cannot alter the securities in his portfolio
After the first year, a part of the holding in the account can be sold provided the minimum investment is maintained for which the investor claims a benefit for the next 2 years
Eligible Securities: dvided- Shares of the NSE CNX 100, BSE 100, Maharatnas, Navaratnas or ETF’s specified in the scheme

Is there a lock-in period?
RGESS investments have a lock-in period of 3 years.
The lock-in period is fixed and flexible. The first year will be a fixed lock-in and the next 2 years will be the flexible lock-in.
In the first year you won’t be able to sell any stocks. In the flexible period, you will able to exit stocks, subject to the following condition,

  • In the case of a flexible period you can sell the stocks provided that the remaining value of your holdings remains the same as the amount you had invested in the first year.

How to link your account?
You need to select “Yes” on page 13 of the application form when you are sending it over to us. If you haven’t selected it and sent the forms, you need to courier Form A to us.

Can you invest more than 50,000 in RGESS?
Yes, you can but you can only claim tax benefits up to 50,000.

What happens if I transfer more than 50,000?
If you transfer money over 50k, that won’t be counted under RGESS.

Note: You can only open RGESS accounts until April 1st, 2018. The govt in the recent budget has withdrawn the tax benefits provided to RGESS. New investors can only claim tax benefits till FY18-19. Read more.