I have invested in ELSS MFs without opening Demat account. Please tell me if I am eligible for RGESS which says first time equity investor?
- Y Srinivasa Rao
Equity Linked Saving Schemes (ELSS) and Rajiv Gandhi Equity Linked Savings Schemes (RGESS) are two different kind of funds. They are similar only to the extent that both invest in equity shares or funds.
It is important for you to know that all your investments in ELSS funds are eligible for deduction under section 80C. To be able to invest in RGESS in the current financial year, your annual taxable income should not be above Rs 10 lakh. Also, you can invest a maximum of Rs 50,000 and a deduction of only 50 per cent will be allowed. So the maximum deduction that you can claim is Rs 25,000. It's a way of saving Rs 5,000 of tax if you have never invested in stocks before. You should make this Rs 50,000 investment only if you have exhausted the Rs 1 lakh limit under section 80C. For a given amount invested, RGESS yields only half the tax saving of Section 80C and so it makes sense to use up the latter first.
You can invest in RGESS even if you invested in ELSS or any other fund earlier because you have never traded with a demat account. RGESS bestows the 'first time equity investor' status to anyone who has not made any purchases in equity or derivative segment through a demat account.
This article was originally published on March 26, 2013.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
