RGESS: Rajiv Gandhi Equity Saving Scheme:

RGESS is an acronym for Rajiv Gandhi Equity saving scheme. RGESS is a tax saving scheme started by the government of India in 2012. A key aim of the scheme was to provide incentives to first-time investors in capital markets. The scheme as such provides tax incentives for first-time investments in capital markets.

Eligibility for investing in RGESS

Below are the key eligibility criteria for investing in RGESS

1. You should be an Indian resident
2. Your annual income should not exceed 12 lac rupees.
3. You should not have a Demat account prior to November 2012 or have not used a Demat account to trade.

Tax benefits under RGESS

1. RGESS provides for tax benefits under section 80CCG which are in addition to tax benefits available under section 80C.
2.  Maximum of 50%  deduction is available on the investments you make under RGESS
3.  Let’s say you invest Rs 50000 in RGESS. Maximum deduction available for a tax benefit from your income will be 50% of 50,000 which is 25,000. So if you are in 20 % tax slab you will be able to save about 5150 in taxes every year.
4. Please note if you are in 10 % tax bracket then maximum savings will be approximately 2570.

Maximum investment and Lock in period For RGESS

Currently, you can make a maximum investment of Rs 50000 in RGESS. The lock-in period for RGESS investment is similar to ELSS schemes i.e. 3 years.

What all securities can I invest under RGESS

Below is the list of eligible securities for RGESS.

Listed equity shares

1.  Top 100 listed shares on BSE ( Bombay stock exchange) or NSE (National stock exchange). You can download the list of eligible shares from BSE and NSE site respectively.

Stocks and ETFs of PSU companies

Stocks of government PSUs which are classified as Maharatnas, Navratna or Mini Ratna.NSE has created a specific index for these government PSUs called CPSE.List of companies under Maharatna CPSE.

     List of companies under Maharatna CPSE

1. Bharat Heavy Electricals Limited
2.  Coal India Limited
3. Oil & Natural Gas Corporation Limited
4.  Steel Authority of India Limited
5. GAIL (India) Limited (GAIL)
6.  NTPC
7. Indian Oil corporation Limited

      List of companies under Mini Ratna

1. Bharat Electronics Limited
2. Bharat Petroleum Corporation Limited
3. Hindustan Aeronautics Limited
4. Hindustan Petroleum Corporation Limited
5. Mahanagar Telephone Nigam Limited
6. National Aluminium Company Limited
7. NMDC Limited
8. Neyveli Lignite
9. Corporation Limited Oil India Limited
10. Power Finance Corporation Limited
11. Power Grid Corporation of India Limited
12. Rashtriya Ispat Nigam Limited
13. Rural Electrification Corporation Limited
14. Shipping Corporation of India Limited

List of Miniratna Category-1 CPSE eligible for RGESS

1. Airports Authority of India
2. Antrix Corporation Limited
3. Balmer Lawrie & Co. Limited
4. Bharat Dynamics Limited
5. BEML Limited
6. Bharat Sanchar Nigam Limited
7. Bridge & Roof Company (India) Limited
8. Central Warehousing Corporation
9. Central Coalfields Limited
10. Chennai Petroleum Corporation Limited
11. Cochin Shipyard Limited
12. Container Corporation of India Limited
13. Dredging Corporation of India Limited
14. Engineers India Limited
15. Ennore Port Limited
16. Garden Reach Shipbuilders & Engineers Limited
17. Goa Shipyard Limited
18. Hindustan Copper Limited
19. HLL Lifecare Limited
20. Hindustan Newsprint Limited
21. Hindustan Paper Corporation Limited
22. Housing & Urban Development Corporation Limited
23. India Tourism Development Corporation Limited
24. Indian Railway Catering & Tourism Corporation Limited
25. IRCON International Limited
26. KIOCL Limited
27. Mazagaon Dock Limited
28. Mahanadi Coalfields Limited
29. Manganese Ore (India) Limited
30. Mangalore Refinery & Petrochemical Limited
31. Mishra Dhatu Nigam Limited
32. MMTC Limited
33. MSTC Limited
34. National Fertilizers Limited
35. National Seeds Corporation Limited
36. NHPC Limited
37. Northern Coalfields Limited
38. Numaligarh Refinery Limited
39. ONGC Videsh Limited
40. Pawan Hans Helicopters Limited
41. Projects & Development India Limited
42. Railtel Corporation of India Limited
43. Rashtriya Chemicals & Fertilizers Limited
44. RITES Limited
45. SJVN Limited
46. Security Printing and Minting Corporation of India Limited
47. South Eastern Coalfields Limited
48. State Trading Corporation of India Limited
49. Telecommunications Consultants India Limited
50. THDC India Limited
51. Western Coalfields Limited
52. WAPCOS Limited

List of Miniratna Category-2 CPSE eligible for RGESS

1. Bharat Pumps & Compressors Limited
2. Broadcast Engineering Consultants (I) Limited
3. Central Mine Planning & Design Institute Limited
4. Ed.CIL (India) Limited
5. Engineering Projects (India) Limited
6. FCI Aravali Gypsum & Minerals India Limited
7. Ferro Scrap Nigam Limited
8. HMT (International) Limited
9. HSCC (India) Limited India
10. Trade Promotion Organisation
11. Indian Medicines & Pharmaceuticals Corporation Limited
12. M E C O N Limited
13. National Film Development Corporation Limited
14. National Small Industries Corporation Limited
15. P E C Limited Rajasthan Electronics & Instruments Limited

List of Mutual fund schemes eligible for RGESS

1. Birla Sun Life NIFTY ETF
2. Goldman Sachs Junior BeES
3. Goldman Sachs Bank BeES
4. Goldman Sachs S&P Shariah BeES
5. IIFL Nifty ETF
6. Kotak Nifty ETF
7. Kotak Sensex ETF
8. Motilal Oswal MOSt Shares M50 ETF
9. Quantum Index Fund
10. Religare Nifty Exchange Traded Fund
11. SBI Sensex ETF

Key Goals of RGESS

1. To incentivize new investors to start investing in equity markets.
2. To provide tax breaks for investments made in PSU stocks and ETFs. Government of India keeps on coming with special CPSE ETF offer at discount rates which also provide RGESS benefits
3.  Bring more money from debt markets to equity markets.

Frequently asked questions on RGESS

1. Can you use RGESS benefits multiple times?

No RGESS is designed to give one-time benefit to fresh entrants into equity markets

2. What is the maximum tax benefits an investor can get from RGESS?

Maximum tax benefit will be for an investor in 20 % tax bracket and will amount to approximately Rs 5200

3.  Is it safe to invest in CPSE ETFs?

CPSE ETFs are based on the underlying PSU stocks if you are ok with investing in these stocks then CPSE ETFs         should be good for you

Further Reading

1. A guide on ELSS investments
2.  ETFs versus Mutual funds