I have an operational demat account and looking to make some investment in the Rajiv Gandhi Equity Savings Scheme. But I have heard that there are some regulations for an investor who already operates a functional demat account. Please clarify them. Also, if I invest Rs 30,000 in the scheme, what would be the possible tax benefit?

S. Patra, Howrah

The Rajiv Gandhi Equity Savings Scheme (RGESS) is targeted at new retail investors who are resident individuals with a salary of less than Rs 10 lakh. However, if you are eligible and have opened your demat account on or before the notification date — November 23, 2012 , you must ensure that there has been no transaction in the equity and derivative segment through the account. If you are not the first account holder of an existing joint demat account, you are eligible to open a fresh demat account for the purpose of the scheme subject to the above conditions. If you are looking to invest Rs 30,000 in the scheme, the amount eligible for tax benefit under section 80CCG will be 50 per cent of your investment, that is Rs 15,000. If you are in the 10 per cent or 20 per cent income tax bracket, your savings will be Rs 1,545 and Rs 3,090, respectively, in the first year of investment. This tax exemption will be above the Rs 1 lakh exemption eligible under section 80C. However, remember, the regulations may see some change in the forthcoing Union budget.

Gift for children

I am a retired pensioner. I want to gift my children a lump sum amount and transfer some of my shares in fiscal 2013-14. Will there be any tax liability?

H.C. De, Calcutta

under section 56 (2) of the income tax act, if, any sum money of more than Rs 50,000, or any capital asset such as shares, is gifted to a relative, that includes any lineal ascendant or descendant, it is not subject to income tax.

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