Equity Linked Savings Scheme Vs Rajiv Gandhi Equity Savings Scheme
Difference between Equity Linked Savings Scheme and Rajiv Gandhi Equity Savings Scheme
| Basis of Difference | Equity Linked Savings Scheme (ELSS) | Rajiv Gandhi Equity Savings Scheme (RGESS) | |
|---|---|---|---|
| Type | Mutual Funds | Vs | Mutual Funds, directly in listed securities declared as "BSE-100" or " CNX-100" or the PSU shares categorised as Maharatna, Navratna or Miniratna by the Central Government or in Exchange Traded Funds (ETFs) |
| Objective | To avail tax rebate under sec 80C of Income Tax on deposits with capital appreciation on investment | Vs | To avail tax rebate under sec 80CCG of Income Tax on deposits with the stated objective of "encouraging the savings of the small investors in the domestic capital markets" |
| Meaning | Invesment of fund is made in diversified equity funds for long term which generates capital appreciation | Vs | It is exclusively for the first time retail investors in securities market that provides additional tax benefits over and above the tax savings schemes under section 80C of Income Tax Act |
| Eligibility | Salaried employee, self-employed, businessman, professional or any other person can invest in it | Vs | Gives tax benefits to first time retail investors in securities market who invest up to Rs. 50,000 and whose annual income is below Rs. 12 lakh and can only be availed for 3 consecutive years |
| Suitable for | Young investor who can take risk and aim for a higher return (usually 15% p.a. or more) | Vs | First time retail investors in securities market who can take risk and wants tax rebate over and above the tax savings schemes under section 80C of Income Tax Act |
| Investible amount | Any amount. Minimum subscription amount is declared by the fund house | Vs | Any amount. Minimum subscription amount is declared by the fund house |
| Maximum Investment Amount | No limit, however, the section 80C limit (Rs. 1.5 Lakh p.a.) will be applicable for claiming rebate | Vs | No limit. however, the section 80CCG limit (Rs. 25,000 p.a.) will be applicable for claiming rebate |
| Interest Rates | Market driven returns, one can expect 15% returns over a longer term period | Vs | Market driven returns, one can expect 12 to 15% returns over a longer term period |
| Interest Rates Compounding | N.A. | Vs | Annually |
| Interest earned is taxable | No | Vs | No |
| Liquidity | No | Vs | No |
| Tenure/ Lock-in Period | 3 Years | Vs | 3 Years, however trading is allowed after 1 year with certian conditions |
| Income Tax Rebate | Yes, upto Rs 1,50,000/- p.a. u/s 80C | Vs | Yes, a person can claim 50% of investment amount which can be maximum upto Rs 25,000 p.a. u/s 80CCG |
| Maturity | Tax Free | Vs | Tax Free |
| Premature Withdrawals | Not allowed | Vs | Not allowed |
| Loans | No | Vs | No |
| Tax Deduction at Source | No | Vs | No |
| Risk | Volatile and risky iInvestment in short term | Vs | Volatile and risky |