Section 80CCG — Rajiv Gandhi Equity Savings Scheme…

STATUTORY ARCHITECTURE — 18-ROW MAP

Statutory text — Income-tax Act, 1961

Deduction in respect of investment made under an equity savings scheme.

80CCG. (1) Where an assessee, being a resident individual, has, in a previous year, acquired listed equity

shares or listed units of an equity oriented fund 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 or units to the extent such deduction does not

exceed twenty-five thousand rupees.

(2) The deduction under sub-section (1) shall be allowed in accordance with, and subject to, the provisions

of this section for three consecutive assessment years, beginning with the assessment year relevant to the

previous year in which the listed equity shares or listed units of equity oriented fund were first acquired.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—

(i) the gross total income of the assessee for the relevant assessment year shall not exceed twelve lakh

rupees;

(ii) the assessee is a new retail investor as may be specified under the scheme referred to in sub-section

(1);

(iii) the investment is made in such listed equity shares or listed units of equity oriented fund as may be

specified under the scheme referred to in sub-section (1);

(iv) 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

(v) such other condition as may be prescribed.

(4) 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.

(5) Notwithstanding anything contained in sub-sections (1) to (4), no deduction under this section shall be

allowed in respect of any assessment year commencing on or after the 1st day of April, 2018 :

Provided that an assessee, who has acquired listed equity shares or listed units of an equity oriented fund in

accordance with the scheme referred to in sub-section (1) and claimed deduction under this section for any

assessment year commencing on or before the 1st day of April, 2017, shall be allowed deduction under this

section till the assessment year commencing on the 1st day of April, 2019, if he is otherwise eligible to claim

the deduction in accordance with the other provisions of this section.

Explanation.—For the purposes of this section, "equity oriented fund" shall have the meaning assigned to it

in the Explanation to clause (38) of section 10.

Function in the statutory architecture

Section 80CCG allowed a resident individual who acquired listed equity shares or listed units of an equity oriented fund under a notified scheme a deduction of fifty per cent of the amount invested, up to twenty-five thousand rupees, for three consecutive assessment years beginning with the year of first acquisition. The assessee had to be a new retail investor as specified in the scheme, with gross total income not exceeding twelve lakh rupees, and the investment had to be locked in for three years.

Operative consequences

If a condition in sub-section (3) was not complied with in any previous year, the deduction originally allowed is deemed income of that previous year (s. 80CCG(4)).
Sub-section (5) bars any deduction for an assessment year commencing on or after 1 April 2018. Its proviso allowed an assessee who had claimed the deduction for assessment year 2017-18 or earlier to continue up to assessment year 2019-20.

Status

Expired. No deduction is allowable after assessment year 2019-20 under s. 80CCG(5). The section carries no bracketed note of omission. The Finance Act, 2026 does not amend s. 80CCG.

The Income-tax Act, 1961 governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, there is no corresponding provision.

Case Laws & Commentary

SECTION 80CCG — DEDUCTION IN RESPECT OF INVESTMENT MADE UNDER AN EQUITY SAVINGS SCHEME (RGESS)

Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)

STATUTORY SCHEME (editorial summary)

Marginal heading: Deduction in respect of investment made under an equity savings scheme.

Section 80CCG allowed a resident individual, being a new retail investor whose gross total income did not exceed the specified limit, a deduction of 50 per cent of the amount invested in listed equity shares or listed units under the Rajiv Gandhi Equity Savings Scheme (RGESS), subject to a maximum deduction of Rs 25,000, for three consecutive assessment years, with a lock-in. The deduction was discontinued: no deduction is allowable from assessment year 2018-19, though an assessee who claimed it for an earlier year could continue for the balance of the three-year period subject to the original conditions.

A. SECTION COMMENTARY

A.1 Structural position

Section 80CCG was the Rajiv Gandhi Equity Savings Scheme deduction — a first-time-investor equity incentive with a lock-in. It has been sunset: no new claim is possible from assessment year 2018-19.

A.2 Provision taxonomy

A 50-per-cent-of-investment deduction, capped at Rs 25,000, for three consecutive years, for new retail investors below an income threshold, with a lock-in and a recapture on breach of the lock-in conditions.

A.3 Core doctrinal themes

No live interpretive controversy; the only residual issues concern the lock-in / recapture for legacy claims and the discontinuance from assessment year 2018-19.

A.4 Legislative evolution / FA amendment trail

Inserted by the Finance Act, 2012 (w.e.f. assessment year 2013-14). Discontinued by the Finance Act, 2017: no deduction from assessment year 2018-19, with a grandfathering for those already in the three-year cycle. Not amended by the Finance Act, 2026.

A.5 CA practitioner pointers

(1) No fresh claim is possible. (2) For grandfathered claimants, ensure the lock-in conditions were met to avoid recapture. (3) Do not confuse RGESS (80CCG) with ELSS (80C) — different schemes and lock-ins.

B. FA 2026 IMPACT NOTE

Section 80CCG is NOT amended by the Finance Act, 2026 and is discontinued from assessment year 2018-19 (subject to grandfathering).

C. CASE LAW — CLUSTERED BY ISSUE

Cluster C-1 : Sunset provision

Note on section 80CCG

Facts: The deduction was discontinued from assessment year 2018-19.

Issue: Whether any fresh claim or substantial controversy survives.

Held: No fresh claim is possible; legacy claims are governed by the lock-in / recapture conditions.

Ratio: Sunset incentive with grandfathering.

Relevance: Recorded for completeness; no reported interpretive case law is digested.

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Income-tax Act, 1961	Income-tax Act, 2025
s. 80CCG — investment under a notified equity savings scheme	No corresponding provision in the Income-tax Act, 2025; a withdrawal for breach of conditions in an earlier year is covered by s. 536(2)(h)