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In March 2012, when the Rajiv Gandhi Equity Scheme (RGESS) was announced by then Finance Minister, Pranab Mukherjee, in his Union Budget, the thought was to encourage the flow of savings in financial instruments and improve the depth of domestic capital market. In its initial version, the scheme was structured to the allow for a one-time income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh, with a 3-year lock-in in the scheme. A lot has changed over the past one year and the scheme has evolved with time.
Sure, the scheme could have been better, but then so could everything else under the sun. As it stands, the scheme is perfectly usable and investors who are eligible under it must not ignore it. After all, tax saved is money saved and equity as an asset class is known to be inflation-beating in the long run. Don't avoid RGESS because of its complexity and lock-in. Just use it through one of the eligible mutual funds and get the equity returns and the tax break.
To read in detail about the cover story.. SUBSCRIBE the March-April issue of Mutual Fund Insight now.
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