Any option to delink the demat account with RGESS ?

POSTED BY anil ON January 10, 2014 12:27 pm COMMENTS (18)

Hi,

I have demat account with SBI which is linked to RGESS because of which some of the stocks which I purchased has got locked for 3 years (1 year fixed lock in and 2 years flexi lock in). My current investment under RGESS is 47K.

1) In the second year If I sell the entire stock investment totaling 47 K with out buying another 47 K worth stocks , will the demat provider SBI levy any penalty. I don’t plan to claim any tax exemption on my investment.

2) What will be start date for 1 year lock in ?. Will it start from the date of the last or first investment under RGESS.

3) Is there any option to delink the demat account with RGESS ?.

Regards,

Anil

18 replies on this article “Any option to delink the demat account with RGESS ?”

  1. Pankaj says:

    Hi everybody ,

    Could anybody let me know that my Demat account comes under RGESS or not, I opened this account on 2015 and since then I have done no trading and at the time of opening, I had also submitted the “Form A”, recently I purchased the “Reliance CPSE ETF” from my HDFC Securities demat account so my Queries are:
    1) In my trading account how can i get that my account is RGESS compliant or not.
    2) For income tax point of view , from where I can get the certificate to submit in my office.

    1. Demat is an account, not a product.

      What you buy in demat is a financial product and you should ask if your product which you bought comes under RGESS

      1. Pankaj says:

        Thanks Manish for your response.

        Yes you are right, but what about my second point
        (“Reliance CPSE ETF” is RGESS compliant)

  2. anil says:

    CSDL is yet to revert to my email , what are the options available before me?. Has any one in the forum faced similar situation.

  3. ashalanshu says:

    Dear Anil, thanks for the update. In your case, as you have not avail any tax benefit on your investments, please ask CDSL to guide you in closure of account.

    Thanks

    Ashal

  4. anil says:

    Tax treatment for RGESS has changed , refer the below email which I received from CSDL.

    You are one of our esteemed customers who have designated their demat account as Rajiv Gandhi Equity Savings Scheme (RGESS) demat account and invested in RGESS eligible securities. We would like to draw your attention to following salient features of the notification issued by Department of Revenue, Government of India dated 18th December, 2013 regarding RGESS – 2013 – the modified RGESS scheme.

    You will now be eligible for the tax benefit under the Scheme for three consecutive financial years beginning with the financial year in which you made your first investment under RGESS – eligible security. Thus, if you have made your first RGESS eligible investment in the year 2012-13 you can avail the benefit under RGESS scheme for investment in eligible securities upto Rs. 50,000 per financial year, for 2 more consecutive financial years i.e. 2013-14 and 2014-15.
    As the facility has been extended to 3 consecutive financial years, the fixed lock-in period will now end on the 31st day of March of the year immediately following the relevant financial year. Thus, if you have made your investment on 20th December 2013, the fixed lock-in period will expire on 31st March, 2015.
    If you need any further assistance, you may approach your Depository Participant or write to us.

  5. ashalanshu says:

    Dear Anil, my pleasure.

    Thanks

    Ashal

  6. anil says:

    Hi Ashal,
    I have been told by sbicapsec staff in writing that delinking will happen automatically after 3 years and it can’t be done manually. You have been of great help Ashal 🙂

  7. ashalanshu says:

    Dear Anil, in that case rest easy and do needful to delink.

    Thanks

    Ashal

  8. anil says:

    Hi Ashal,
    I have not claimed tax benefit for the RGESS investment , because of mi-selling on the part of sbicapsec my demat account was linked with RGESS.
    Regards,
    Anil

  9. ashalanshu says:

    Dear Anil, please read my reply again, the already claimed income tax benefit ‘ll be reversed not the new one as you are not reinvesting. If you were not at all ready to hold for 3Y, you w’d not had invested in RGESs at all.

    thanks

    Ashal

  10. ashalanshu says:

    Dear Akv, if you opt to withdraw and planning to not invest again, the income tax benefit claimed by you earlier ‘ll be reversed and you need to pay tax.

    Thanks

    Ashal

    1. anil says:

      Hi Ashal,

      Thanks for you reply . Most probably I won’t claim tax benefit so there should not be any issues.

      Regards,
      Anil

  11. ashalanshu says:

    Dear Akv, you can not pull out your money from trading account as it’s prohibited for point no. 1.

    Each individual invest is locked from the date of it’s investment.

    Thanks

    Ashal

    1. akv says:

      Hi Ashal,
      As per the information available in RGESS website it states I can withdraw the investment after 1 year but I will have to make equivalent investment. How ever it doesn’t states anything about penalty if this is not done.

      1st year investment : 47K
      2nd year : If I sell 47 k then I need to buy RGESS stocks worth 47K.
      RGESS follows 1 year fixed and 2 year flexi lock in concept.

      Staff at sbi don’t have much clue about RGESS.

  12. ashalanshu says:

    Dear Anil, you can not delink your RGESS enabled demat account.

    Thanks

    Ashal

    1. akv says:

      Thanks for your reply Ashal.
      Can you pl reply on point no 1 and 2.

  13. akv says:

    Can some one please reply.

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