80CCG of Income Tax Act

Section 80CCG was introduced under the Rajiv Gandhi Equity Saving Scheme (RGESS) to encourage first-time retail investors to explore the stock market. It offered a partial tax deduction on eligible equity investments but here’s the catch: the scheme has been discontinued since FY 2017–18.

What Was Section 80CCG (RGESS)?

Back when it was active, Section 80CCG aimed to give small investors the confidence to invest in the equity market. The government wanted more people to participate in India’s growth story by investing in listed shares and added a little tax incentive to make it easier.

Here’s how it worked:

• Tax benefit: You could claim 50% of your investment in certain equities as a deduction.
• Maximum investment: ₹50,000 which meant a maximum deduction of ₹25,000.
• Lock-in period: Investments had to be held for three years to qualify.
• Eligible options: Only specific listed shares and mutual funds under the RGESS guidelines counted.

Who Could Claim It?

To keep things fair and targeted, only first-time retail investors could claim the benefit. In simple terms, this meant you shouldn’t have traded in equities before claiming this deduction.

Other key points:

• Your total income had to be below ₹12 lakh (earlier ₹10 lakh).
• Only individual taxpayers could claim it not HUFs or companies.
• Investments had to follow the RGESS list of approved securities

Can You Still Claim It Today?

No not anymore. The 80CCG deduction was phased out from 1st April 2017. That means new investments made after this date don’t qualify for any tax benefit under this section.

However, if you had invested earlier and already claimed the deduction, it still remains valid as long as you met the lock-in and reporting requirements.

Example

Let’s say Priya, a first-time investor, put ₹50,000 in RGESS-approved stocks. She was allowed to claim 50% of that amount ₹25,000 as a deduction in her income tax return that year. As long as she held those investments for 3 years, she enjoyed the full tax benefit.

What Should You Do Now?

Since 80CCG no longer applies, you can still invest smartly and save tax through other sections:

• ELSS (under 80C): Great for those who want equity exposure with tax benefits.
• NPS (under 80CCD): Perfect for building a retirement fund with extra tax deductions.
   

Both options are active, transparent, and easy to manage unlike the phased-out RGESS.