If you fall into the tax bracket, then you might know that it becomes quite difficult to make judge the correct place to put the money for availing the rebate for income tax. Panama paper’s scam was brought to light recently. It depicted the list of those people who have violated several laws in order to save taxes. After this scam had been unraveled, it made people think that when the celebrities, businessmen, and politicians, who are considered to be the role models, are finding out illegal ways to save taxes then why not them. But, it is a wrong practice. The taxpayers should understand that they have much better options for availing tax benefits rather than unlawfully keeping their money with them. Schemes like Rgess has been launched to make the best use of your hard-earned money and providing taxation benefits at the same time.
Rajiv gandhi equity saving scheme was initiated by the government of india with a view to providing additional benefit of tax saving to the clients along with attracting investments in the retail market. The scheme has been named after the sixth pm of india mr. Rajiv gandhi and was launched in september 2012. This scheme aims at attracting those clients who have never invested in the stock market and earns up to rs. 12 lac annually, which was initially rs. 10 lac. There is a separate section defined for Rajiv gandhi equity savings scheme in the income tax act, which has been named section 80ccg.
A client who is keen to invest in Rgess should know that he will get an extra rebate of rs. 50,000 apart from the regular rebate of rs. 1.5 lac. It means that the tax benefit would be given only to 50% of the total amount invested in Rgess. If an investor invests rs 50,000 and falls in the 20% tax bracket, then he will be able to save 20% on 25,000 (which is 50% of 50,000). Hence, the client will be able to attain a taxation benefit of rs. 5,000. The benefit depends on the tax bracket to which the belong. Like all other tax saving schemes, there is a lock-in period of three years in Rgess also. But, it is quite less as compared to the other tax-saving mechanisms like ppf, where partial withdrawal is possible in six years and 15 years is the maturity period.
Above figure shows the investment amount in descending order. This means that the client can invest a maximum amount of rs. 50,000 and a minimum of rs. 5,000 in the scheme and depending on the tax bracket they save tax. For example, if a client invests rs. 5,000 in Rgess scheme then he will get a rebate on its half, I .E., rs. 2500. Then, if he falls in the 10% tax bracket, then he will be able to save rs. 258, while he will save rs. 515 for 20% tax bracket and rs. 772 for 30% bracket. Thus, it is evident that a client who invests in Rgess will be eligible to get a rebate on the fifty per cent of that amount, and the tax will be saved according to the taxation percentage of every client.
The clients should be clear that for investing into the Rgess fund, they need to have a personal demat account. Although there is a lock-in period of three years in the scheme, the clients are eligible to trade the holdings after one year has elapsed from the date of commencement of the scheme. This means that the investors should have shares worth the amount that has been invested in the Rgess scheme. Thus, the securities bought through the demat account under Rgess will accordingly be subjected to a lock-in for the first year of investment which is known as the fixed lock-in period. The investor is not allowed to trade the units of the Rgess fund during the fixed lock-in period. However, the client is able to trade them once the lock-in period gets over.
Thus, a client should invest in Rgess mutual fund for saving tax and building up a huge corpus as well. It is a golden opportunity for the clients to who have never traded in the share market and fulfill the other requirements. With the expansion of technology now it is possible to use online trading mechanisms for Mutual Fund Invest. Mysiponline provides you an apt platform to manage your money efficiently using an online approach.
Rajiv gandhi equity saving scheme was initiated by the government of india with a view to providing additional benefit of tax saving to the clients along with attracting investments in the retail market. The scheme has been named after the sixth pm of india mr. Rajiv gandhi and was launched in september 2012. This scheme aims at attracting those clients who have never invested in the stock market and earns up to rs. 12 lac annually, which was initially rs. 10 lac. There is a separate section defined for Rajiv gandhi equity savings scheme in the income tax act, which has been named section 80ccg.
A client who is keen to invest in Rgess should know that he will get an extra rebate of rs. 50,000 apart from the regular rebate of rs. 1.5 lac. It means that the tax benefit would be given only to 50% of the total amount invested in Rgess. If an investor invests rs 50,000 and falls in the 20% tax bracket, then he will be able to save 20% on 25,000 (which is 50% of 50,000). Hence, the client will be able to attain a taxation benefit of rs. 5,000. The benefit depends on the tax bracket to which the belong. Like all other tax saving schemes, there is a lock-in period of three years in Rgess also. But, it is quite less as compared to the other tax-saving mechanisms like ppf, where partial withdrawal is possible in six years and 15 years is the maturity period.
Rgess Benefit Under Various Taxation Brackets
Above figure shows the investment amount in descending order. This means that the client can invest a maximum amount of rs. 50,000 and a minimum of rs. 5,000 in the scheme and depending on the tax bracket they save tax. For example, if a client invests rs. 5,000 in Rgess scheme then he will get a rebate on its half, I .E., rs. 2500. Then, if he falls in the 10% tax bracket, then he will be able to save rs. 258, while he will save rs. 515 for 20% tax bracket and rs. 772 for 30% bracket. Thus, it is evident that a client who invests in Rgess will be eligible to get a rebate on the fifty per cent of that amount, and the tax will be saved according to the taxation percentage of every client.
How Can A Client Invest In Rgess?
The clients should be clear that for investing into the Rgess fund, they need to have a personal demat account. Although there is a lock-in period of three years in the scheme, the clients are eligible to trade the holdings after one year has elapsed from the date of commencement of the scheme. This means that the investors should have shares worth the amount that has been invested in the Rgess scheme. Thus, the securities bought through the demat account under Rgess will accordingly be subjected to a lock-in for the first year of investment which is known as the fixed lock-in period. The investor is not allowed to trade the units of the Rgess fund during the fixed lock-in period. However, the client is able to trade them once the lock-in period gets over.
Thus, a client should invest in Rgess mutual fund for saving tax and building up a huge corpus as well. It is a golden opportunity for the clients to who have never traded in the share market and fulfill the other requirements. With the expansion of technology now it is possible to use online trading mechanisms for Mutual Fund Invest. Mysiponline provides you an apt platform to manage your money efficiently using an online approach.
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