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Section 80CCG Deduction

Under Section 80CCG a deduction of upto Rs.25000 being 50% of the amount invested in listed equity shares or listed units of an equity oriented fund under ‘Rajiv Gandhi Equity Savings Scheme’ is allowed.

Deduction for Investment under Rajiv Gandhi Equity Savings Scheme

Section 80CCG deduction is allowed for investments made during a period of three consecutive previous years, beginning with the previous year in which the listed equity shares or listed units of equity oriented fund were first acquired.

Deduction under section 80CCG is admissible subject to the following conditions.

Gross Income
The gross total income of the assessee for the relevant assessment year should not exceed twelve lakh rupees.
New Retail Investor
The assessee is a new retail investor as may be specified under the scheme.
Specified Listed Equity Shares
The investment is made in such listed equity shares or listed units of equity oriented fund as may be specified under the scheme.
Lock-in Period
The investment is locked-in for a period of three years from the date of acquisition in accordance with the scheme.
Deduction for Investment under Rajiv Gandhi Equity Savings Scheme

Conditions for Availing Section 80CCG Deduction

If the assessee, in any previous year, fails to comply with any condition specified above, the deduction originally allowed shall be deemed to be the income of the assessee of such previous year and shall be liable to tax. No deduction would be allowed under this section for the assessment year commencing, on or after 1 April, 2018 (PY 2017-18 i.e. 1 April, 2017 to 31 March, 2018). However, a person who made the first investment on or before 31 March, 2017 can avail the benefit of deduction on investment for three consecutive previous years which may fall during previous years commencing on or after 1 April, 2017. For example a person who made first investment in PY 2015-16 can avail deductions during the PY 2015-16, PY 2016-17 and PY 2017-18 (upto 31 March, 2018).

Section 80CCG - Income Tax - Bare Act

After section 80CCF of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2013, namely:

  • 80CCG. Deduction in respect of investment made under an equity savings scheme.—(1) Where an assessee, being a resident individual, has, in a previous year, acquired listed equity shares in accordance with a scheme, as may be notified by the Central Government in this behalf, he shall, subject to the provisions of sub-section (3), be allowed a deduction, in the computation of his total income of the assessment year relevant to such previous year, of fifty per cent of the amount invested in such equity shares to the extent such deduction does not exceed twenty-five thousand rupees.
  • Where an assessee has claimed and allowed a deduction under this section for any assessment year in respect of any amount, he shall not be allowed any deduction under this section for any subsequent assessment year.
  • The deduction under sub-section (1) shall be subject to the following conditions, namely:
    • the gross total income of the assessee for the relevant assessment year shall not exceed ten lakh rupees;
    • the assessee is a new retail investor as may be specified under the scheme referred to in sub-section (1);
    • the assessee is a new retail investor as may be specified under the scheme referred to in sub-section (1);
    • the investment is made in such listed equity shares as may be specified under the scheme referred to in sub-section (1);
    • the investment is locked-in for a period of three years from the date of acquisition in accordance with the scheme referred to in sub-section (1); and
    • such other condition as may be prescribed.
  • If the assessee, in any previous year, fails to comply with any condition specified in sub-section (3), the deduction originally allowed shall be deemed to be the income of the assessee of such previous year and shall be liable to tax for the assessment year relevant to such previous year.

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