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DISCLAIMER: Tax Deduction under section 80CCG has been discontinued since April 1, 2017

What is Section 80CCG?

Section 80CCG of the Income Tax Act, 1961 has provisions for tax deductions to taxpayers who invest in the equity market in India. This section of the Income Tax Act was added to encourage taxpayers to invest their money into equities, driving up investment through 80CCG deduction. Section 80CCG provides tax deductions to individuals who are looking to make their first-ever investment into equities.

Section 80CCG is also known as the Rajiv Gandhi Equity Savings Scheme. It was introduced with the aim of helping people develop a habit of investing their income for a financially secure future, while at the same time increasing the level of investment into the Indian economy. Section 80CCG has been discontinued since April 1, 2017.

Eligibility Criteria for Section 80CCG

The following is the eligibility criteria for Section 80CCG of the Income Tax Act, 1961. Only individuals who fall in any of the below-given categories can avail income tax deductions under Section 80CCG:

 

  1. Only individuals making their first-ever investment can claim 80CCG deductions.

  2. The first-time investor’s gross total income cannot exceed more than ₹12,00,000 per annum.

  3. Investments that are listed as equity shares or investments into equity-oriented funds and schemes will qualify for tax deductions under Section 80CCG. Stocks that are listed under the BSE 100 and public sector undertaking stocks along with ETF and Mutual Funds are also eligible for tax deductions under this section. Other types of investments are not covered under Section 80CCG and will not be eligible for a tax deduction.

  4. The investments made must be locked in for at least 3 years.

Section 80CCG Deductions and Limit

The following is the list of income tax deductions and their limits under Section 80CCG:

 

  1. First-time investors can get a tax deduction of up to 50% on their first-ever investments.

  2. The tax deduction can be availed on an investment of maximum ₹50,000.

  3. Essentially, first-time investors can get a 50% tax deduction on a maximum of ₹50,000, meaning their maximum tax deduction will amount to ₹25,000.

Frequently Asked Questions

  • ✔️What comes under Section 80CCG?

    Section 80CCG of the Income Tax Act, 1961 has provisions for first-time investors to get a tax deduction on their first-ever investments. Popularly known as the Rajiv Gandhi Equity Savings Scheme, this section provides a 50% tax deduction on a maximum investment of ₹50,000. It should be noted that Section 80CCG has been discontinued since 2017.  

  • ✔️What is the Section 80CCG deduction limit?

    Under Section 80CCG, an individual can claim a tax deduction for a maximum of ₹50,000 investment. However, only 50% tax deduction is provided on this ₹50,000, which brings down your maximum tax deduction to ₹25,000.

  • ✔️How can I claim deduction under Section 80CCG?

    When Section 80CCG was active, you could claim a tax deduction on your investment at the time of filing your income tax returns. However, since the section has been discontinued, the tax deduction is not available anymore.  

  • ✔️Why was Section 80CCG discontinued?

    Section 80CCG of the Income Tax Act, 1961 was discontinued at the Union Budget meeting of 2017 due to the lack of investment under this scheme.

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