Monthly Archives: January 2014

RGESS Frequently Asked Questions(FAQs) – RR Finance

What is RGESS?

Rajiv Gandhi Equity Savings Scheme (RGESS), is a tax saving scheme announced in the Union Budget 2012-13 (para 35). The scheme is designed exclusively for the first time retail individual investors in securities market, whose gross total income for the year is less than or equal to Rs. 10 lakh. The investor would get under Section 80 CCG of the Income Tax Act, a 50% deduction of the amount so invested, upto a maximum investment of Rs. 50,000, from his/her taxable income for that year.

What is the objective of the Scheme?

As announced in the Union Budget 2012-13, the objective of the Scheme is to encourage the flow of savings and to improve the depth of domestic capital markets. This would help in promoting an equity culture’ in India. The Scheme aims at widening the retail investor base in the Indian securities markets and also furthers the goal of financial stability and financial inclusion.

What is the legal provision for RGESS?

A new section 80 CCG under the Income tax Act, 1961 on ‘Deduction in respect of investment under an equity savings scheme’ was introduced, vide Finance Act 2012, to give tax benefits to ‘New Retail Investors’ who invest up to Rs.50,000 in ‘Eligible Securities’ and whose gross total annual income is less than or equal to Rs.10 Lakhs. The details of the RGESS Scheme were notified on 23 November 2012(Section No. 2777(E); Notification No. 51) and vide subsequent corrigendum dated 5 December 2012(Section No. 2835(E); Notification No. 53) by Department of Revenue. The operational guidelines were issued by SEBI on 6 December 2012.

Would first time investors not lose money in the equity market? Would it be too dangerous for them to invest in it?

The investors in the RGESS run the risk of losing money in the equity market, like any other investor in the securities market. The Scheme does not provide any guarantee of assured returns. Therefore, investors under RGESS are advised to do due diligence before making any investments in the equity market. However, while designing the Scheme, safeguards like, restricting the investments to select large cap stocks, lock-in period with enough flexibility to take benefits of the positive market movements etc. have been provided to protect the interests of the first time investors. To give the benefit of diversification and consequent risk minimization, investments into Exchange Traded Funds (ETFs) or Mutual funds, set up as per the criteria laid down in the scheme, are also allowed under the Scheme.

What are the benefits/ highlights of RGESS compared to other tax saving schemes?

The following are the benefits of RGESS:

  • The allowed tax deduction u/s 80 CCG will be over and above the Rs. 1 Lakh limit permitted under Section 80C of the Income Tax (IT) Act, making it thus attractive for the middle class investors.
  • Further, the Dividend income is also tax free.
  • Investor is free to trade / churn the portfolio after the lock-in period in each of the years following the first year of investment, subject to certain conditions.
  • Gains arising out of higher market valuation of RGESS eligible securities can be realized after a year viz: fixed lock – in period. Provisions exist to protect the investor from general declines in the market to a certain extent. This is in contrast to all other tax saving instruments.
  • You can meet emergencies through pledging or even by selling off some stocks after the fixed lock in period.
  • For investments upto Rs.50,000 in your sole RGESS demat account, if you opt for Basic Service Demat Account, annual maintenance charges for the demat account is zero and for investments upto Rs. 2 lakh, it is stipulated at Rs 100.
  • The investments can be made in installments during the first financial year in which tax deduction is claimed.

Why RGESS Investments are limited to top 100 stocks?

The Scheme is designed for new investors who are venturing in the equity markets for the first time. The choice of investments have been restricted to the stocks included in BSE 100 or CNX 100 and to selected PSU stocks as they generally have shown relatively lower volatility, higher liquidity, and there is adequate reporting and analysis available in the market. The range of 100 stocks also provides enough scope for diversification of investments.

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Rajiv Gandhi Equity Savings Scheme

RGESS is a new equity tax advantage savings scheme for equity investors in India, with the stated objective of “encouraging the savings of the small investors in the domestic capital markets.” . It was approved by The Union Finance Minister, Shri. P. Chidambaram on September 21, 2012. It is exclusively for the first time retail investors in securities market. This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and who is below Rs. 12 lakh.

The Scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an ‘equity culture’ in India. This is also expected to widen the retail investor base in the maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year.

  • It provides additional tax benefits over and above under the Income Tax Act.
  • Gains, arising of investments in RGESS, can be realized after a year. This is in contrast to all other tax saving instruments.
  • Investments are allowed to be made in installments in the year in which are filed.
  • Dividend payments are tax free.
  • This scheme has a long run benefit of educating the retail investment segment and thereby moving towards financial inclusivity in the country.
  • Success of this scheme can lead to transfer of assets instruments such as bank deposits and FDs to the capital markets, leading to diversification in retail investor portfolio and also leading to more productive “capital formation” assets.

Eligibility: – The deduction under the Scheme the conditions of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or 12 lakh rupees.

The deduction under the Scheme shall be available to a new retail investor who:

  • is a resident of India
  • has a gross total income for the financial year less than or equal to Rs. 12 Lakh
  • complies with all the other conditions of the Scheme

For best terms please contact RR Investors call 1800110444 or 9540056975 or dial 01123636363

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How to choose a good company deposit scheme?

Choosing a Good Company deposits Scheme:- Ignore the unrated Company Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFC s, RBI has made it mandatory to have an A rating to be eligible to accept public deposits, one should go further and look at only AA or AAA schemes. Within a given rating grade, choose the company with a better reputation. Once you decide on a company, next choose the schemes that have given a better return.

Unless you need income regularly, you should prefer cumulative to regular income option since the interest earned automatically gets reinvested at the same coupon rate giving upon better yields. It also gives you a lump-sum amount at one go. It is better to make shorter deposit of around 1 year to 3 years. This way you not only can keep a watch on the company’ s rating and servicing but can also plan to have your money back in case of emergency. Check on the servicing standards of the company. You should not oblige companies that care little about investor services like promptly sending interest warrants or the principal cheque.

Which companies can accept Deposit?

Companies registered under Companies Act 1956, such as:

  • Manufacturing Companies.
  • Non-Banking Finance Companies.
  • Housing Finance Companies.
  • Financial Institutions.
  • Government Companies.

Up to what limits can a company accept deposit?

A Non-Banking Non-Finance Company (Manufacturing Company) can accept deposit subject to following limits: Up to 10% of aggregate of paid-up share capital and free reserves if the deposits are from shareholders or guaranteed by directors. Otherwise up to 25% of aggregate of paid-up share capital and free reserves.

A Non-Banking Finance Company can accept deposits up to following limits: Equipment Leasing Company can accept four times of its net owned fund. Loan or Investment Company can accept deposit up to one and half time of its net owned funds.

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What are the benefits of investing in Mutual Funds?

Benefits of Mutual Funds :- Qualified and experienced professionals manage Mutual Funds. Generally, investors, by themselves, may have reasonable capability, but to assess a financial instrument a professional analytical approach is required in addition to access to research and information and time and methodology to make sound investment decisions and keep monitoring them.

  • Since Mutual Funds make investments in a number of stocks, the resultant diversification reduces risk. They provide the small investors with an opportunity to invest in a larger basket of securities. Mutual Funds* The investor is spared the time and effort of tracking investments, collecting income, etc. from various issuers, etc.
  • It is possible to invest in small amounts as and when the investor has surplus funds to invest.
  • Mutual Funds are registered with SEBI. SEBI monitors the activities of Mutual Funds.
  • In case of open-ended funds, the investment is very liquid as it can be redeemed at any time with the fund unlike direct investment in stocks/bonds.

How are mutual funds different from portfolio management schemes?

In case of mutual funds, the investments of different investors are pooled to form a common invertible corpus and gain/loss to all investors during a given period are same for all investors while in case of portfolio management scheme, the investments of a particular investor remains identifiable to him. Here the gain or loss of all the investors will be different from each other.

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Mutual Fund Plans in India

Are there any risks involved in investing in Mutual Funds?

Mutual Funds do not provide assured returns. Their returns are linked to their performance. They invest in shares, debentures and deposits. All these investments involve an element of risk. The unit value may vary depending upon the performance of the company and companies may default in payment of interest/principal on their debentures/bonds/deposits. Besides this, the government may come up with new regulation which may affect a particular industry or class of industries. All these factors influence the performance of Mutual Funds.

As mutual fund schemes invest in stock markets only, are they suitable for a small investor like me?

Mutual funds are meant only for a small investor like you. The prime reason is that successful investments in stock markets require careful analysis of scripts which is not possible for a small investor. Mutual funds are usually fully equipped to carry out thorough analysis and can provide superior returns.

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Bajaj Finserve Company Fixed Deposits Schemes (AAA rated NBFC)

 Fixed Deposit Schemes

RR Financial Consultants‘s insight:

Company Profile: Bajaj Finance Ltd. is the most diversified fastest growing NBFC in the country from one of the most trusted and respected business houses in India & the largest financier of consumer durables in the country and one of the most profitable firms in the category.

Fixed Deposit Highlights: Now avail best in class fixed deposits from Bajaj Finance Limited (AAA rated NBFC) at attractive rates. BFL offers a wide range of Fixed Deposit Schemes for various investors.

  • Rated FAAA by CRISIL, which means highest safety of your money
  • Attractive and assured rates of interest for your money to grow periodically
  • 5 maturity buckets carrying different rates of interests to suit everyone’s needs
  • Flexibility of payment option through electronic (for deposits size more than Rs 50 lakhs) or physical modes
  • Special rates for senior citizens, existing customers and group employees
  • Bajaj Finance in house products available at attractive rates especially to the depositor.

Note: Additional rate of 0.25% p.a. for Senior Citizens (subject to provision of proof of age), Employees – Additional rate of 0.25% p.a. & BFL Existing Live Customers – Additional rate of 0.25% p.a.

Minimum Deposit Value:

  1. Delhi/NCR and Mumbai – INR 150,000
  2. Bangalore, Chennai, Hyderabad, Kolkata, Ahmadabad & Pune – INR 100,000
  3. 3- Rest of India– INR 100,000 (non – cumulative scheme) & INR 50,000 (cumulative scheme)

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Firmness in Asian and European stocks also boosted sentiment!

Key benchmark indices surged as the market sentiment was boosted after data showed inflation based on the wholesale price index (WPI) eased to five-month low at 6.16% in December 2013. Easing inflation provided legroom for the central bank to cut interest rates in its next policy meet in order to bolster growth. Firmness in Asian and European stocks also boosted sentiment. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their highest level in almost two weeks. The market breadth, indicating the overall health of the market, was positive. The BSE sensex closed at 2121289.49 and 256.61 point up.YES BANK

Who Moved and Why

  • NIIT Technologies hits 52-week high after Q3 results.
  • CMC drops 12.12% in two days after declaring Q3 results.
  • Bajaj Finserv inches up amid volatility after good Q3 numbers.
  • ISGEC Heavy spurts as board to consider buyback proposal.
  • Strong Q3 numbers generate interest in Yes Bank.
  • Yes Bank gains after strong Q3 earnings.
  • Bajaj Finance inches up amid volatility after strong Q3 numbers.

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Best investment Offer in NHAI Tax Free Bonds!

RR Investors offers the best public issues of National Highway Authority of India Tax free secured redeemable non convertible debentures (NCD’s) bonds. Invest in tax free bonds provide by NHAI and get 8.75% annual return.

For more information please visit: –
Download NHAI Form here: –

For best terms please feel to call us @9540056975, 01123636363 or dial toll free 1800110444.

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