Some of the various drawbacks deterring first-time investors to invest in RGESS
But the various forms that need to be filled so to give a proof of being a first time investor for claiming tax benefits has to an extent not proved investor-friendly. Know about investors who qualify as first-time equity investors under the scheme.
Though, a boon for investors, a compulsory maintenance of a demat account also mars an investment.Know how you can invest in a RGESS scheme?
Another feature that proves to be detrimental to the scheme is the difficult exit one could made from the scheme as it comes with a 3 year lock-in. Nonetheless, tax benefit is available for investment in eligible financial instruments that are equity-oriented across the lock-in period of three years.
Apart from it, one of the main drawback of the scheme is the quantum of tax-benefit that investors become eligible for. In a RGESS scheme, first-time investor in equity investing an amount of Rs.
After all this, the maximum tax benefit you get is Rs.5,000 if you fall in the 20% tax bracket and invest Rs.50,000 in a year in RGESS. The tax-benefit offered in the scheme is much less than what a ELSS scheme would offer. Also, investment in a ELSS scheme could be made without much hassles and limitations. So, the lower tax-benefit is another parameter that does not pushes investment in the scheme. Know which one is better ELSS or RGESS.
As suggested to prop up investment in the scheme, some of the features of the ELSS scheme be incorporated so as to stimulate the interest of the investors. Also, a better and simplified structure that reaches out to more of investors will prove to be lucrative for the scheme as well as first-time investors in equity. Nonetheless, the scope of first-time investors in equity should also be revised for garnering higher investments.