Surveys after surveys have revealed the truth that people have lost their hard earned money in insurance products when they choose to invest in insurance products. This is also a known fact that insurance products are mainly bought in India to save tax. Now we have a new investment scheme with tax benefits targeted towards first time investors in equity. Buying any financial product only for tax benefit cannot be considered a good idea unless you invest in the product after evaluating the merits and demerits of the scheme before investing. The finance minister has recently issued details of much awaited Rajiv Gandhi Equity Savings Scheme after six months since it was announced in the last budget. The time will tell us whether “History repeats itself again or not”. Let us understand the nitty gritty of the scheme on the basis of the communication from the Finance Ministry. First of one should know about certain preconditions before they become eligible to invest in the scheme for taking tax benefit. The scheme is targeted towards first time equity investors to be identified on the basis of PAN numbers and whose annual income is up to Rs. 10 lakhs p.a. in the current financial year. The maximum investment eligible for the tax benefits is Rs. 50,000 on which the investor will get a deduction of 50% of the amount invested. People earning 10 lakhs fall maximum in 20% tax slab so will be able to save maximum tax of Rs. 5,150. Before investing one must know that to claim the tax benefits investors have to invest in equity either directly in stocks of BSE 100 or CNX 100 index or those of public sector undertakings which are Maharatna’s Navratna’s and Miniratna’s. In addition mutual fund schemes or ETFs who invests in such eligible securities are also brought under this scheme.

RGESS – Higher risk inbuilt with tax benefits

Surveys after surveys have revealed the truth that people have lost their hard earned money in insurance products when they choose to invest in insurance products. This is also a known fact that insurance products are mainly bought in India to save tax. Now we have a new investment scheme with tax benefits targeted towards first time investors in equity. Buying any financial product only for tax benefit cannot be considered a good idea unless you invest in the product after evaluating the merits and demerits of the scheme before investing. The finance minister has recently issued details of much awaited Rajiv Gandhi Equity Savings Scheme after six months since it was announced in the last budget. The time will tell us whether “History repeats itself again or not”.  Let us understand the nitty gritty of the scheme on the basis of the communication from the Finance Ministry.

First of one should know about certain preconditions before they become eligible to invest in the scheme for taking tax benefit. The scheme is targeted towards first time equity investors to be identified on the basis of PAN numbers and whose annual income is up to Rs. 10 lakhs p.a. in the current financial year.

The maximum investment eligible for the tax benefits is Rs. 50,000 on which the investor will get a deduction of 50% of the amount invested. People earning 10 lakhs fall maximum in 20% tax slab so will be able to save maximum tax of Rs. 5,150. Before investing one must know that to claim the tax benefits investors have to invest in equity either directly in stocks of BSE 100 or CNX 100 index or those of public sector undertakings which are Maharatna’s Navratna’s and Miniratna’s. In addition mutual fund schemes or ETFs who invests in such eligible securities are also brought under this scheme.