Section 80CCG: Fully comprehensive 2025

Individuals and HUFs in India are majorly concerned about tax planning. Section 80CCG was a very important provision in the list of popular income tax deductions which were used to facilitate investment in equity by retail investors. As salaried professionals, self employed, and tax planning consultants, one would save a lot of time and confusion during the filing just by knowing about the journey, status, and relevance of Section 80CCG in 2025.

This article explains in simple, easy to understand terms, the breakdown of Section 80CCG, what it used to entitle people to and what it is currently, what people have to ask about deductions, eligibility, alternative options and practical comparisons to 2025.

What is the Section 80CCG? It Is Available in 2025?

Section 80CCG, also known as the Rajiv Gandhi Equity Savings Scheme (RGESS) deduction, was introduced in 2012 primarily to promote investment by new retail investors in the stock market. It enabled jurisdictional tax payers to avail a deduction in case they bought through notified equity stocks or shares in equity oriented mutual funds. Nonetheless, this advantage came with certain terms and conditions on a temporary basis.

Is FY 2024-25 Section 80CCG?

No, Section 80CCG is not available for tax benefits in Financial Year 2024-25 (Assessment Year 2025-26). This was slowly phased out and 80CCG deduction is not available to investment after Assessment Year 2017-18. But taxpayers can find the references of this section, done long ago in the internet based tax forms or guidelines, which can cause confusions.

It is a little known fact that there are 77,000,000 households in the United States.

Upon its launching, Section 80CCG is the first of its kind to narrow down the interests of first time investors in the equity market done with the twofold purpose of increasing the investment culture and multiplying tax saving particularly on Section 80C.

What Was Section 80CCG Broadly Intended to Accomplish?

Section 80CCG was primarily aimed at two things:

• Encourage small payers to join Indian stock markets.
• Provide other tax saving instruments of equity investors, besides Section 80C and 80CCD to the first time investor.

The investment in certain securities allowed people who invested in it a deduction of tax in addition to the fifty thousand rupee limit that was given under Section 80C.

Who could Claim Under Section 80CCG?

To get the benefit under Section 80CCG (till AY 2017-18), one had to fulfill these conditions:

• Individual who is a resident and has an annual gross income that does not exceed twelve lakh, rupees
• First time investor in equity securities (not holding a Demat account before, or having one never used for trading as per notified rules)
• Placed in listed equity or specified mutual funds that are eligible with respect to the investment or specified mutual funds
• Did not make the claim of deduction in more than three years following the first year of investment
• And investments had to be tied up at least in three years of course.

Expert Insight

Awareness level concerning Section 80CCG was also not so high at that time among urban and rural tax payers. Majority of people that are eligible have not been able to make optimum use of this deduction or have not been lucky to utilize it.

What were the outlines or highlights of Section 80CCG?

There were several special provisions that section 80CCG was given, which made it stand out among other common deductions such as Section 80C.

• Tax deduction was fifty percent of the invested amount (maximum investment capped at fifty thousand rupees per year).
• First time investors with a specified income level could only claim, and this was only retail.
• The investment had a three-year lock in.
• The investments made in the notified equity shares as well as some mutual funds were the only ones that were allowed.
• Deduction permitted on up to three successive tax years.
• The section was used like another deduction to Section 80C.

What Got the 80CCG Deduction to Do?

Assume that you had purchased eligible RGESS mutual funds amounting to rupees fifty thousand in FY 2016-17.

For that year of assessment, you might take a fifty percent deduction i.e. rupees twenty five thousand under Section 80CCG.

This tax exemption was on top of the amount of rupees one lakh fifty thousand that was allowed by Section 80C.

Pros:

• Compelled first time investors into equity market
• Gave extra fifty percent tax write off on admissible investment

Cons:

• The ordinary taxpayer found it complex in scheme design
• Restricted qualifying bonds and harsh lock in period
• High level of income restricted its reach
• It has been discontinued now, hence is not relevant in new investments

You know, didn’t you?

Lock in under the RGESS was a factor that perturbed many since incidental withdrawal or trading could backfire and pull back the tax write-off and get punished.

Comparison Table: Section 80CCG vs Section 80C

Why had the Government withdrawn Section 80CCG?

Gradually, the government reduced RGESS and Section 80CCG deduction because of the following reasons:

• There is low participation with majority of new investors favouring mutual funds or SIP under section 80C ELSS
• Lock-in rules were complex, verification was to be done manually by the broker and investors used to file complaints frequently
• Existing provisions like 80C, 80CCD(1B) already covered investment needs for most persons
• Emphasis was on less discriminatory and friendlier forms of tax saving plans
• It was announced in Union Budget 2017 that this discontinuation was to take place.

People Ask

Is it possible to avail Section 80CCG on pre 2017 investments?

No, only investment made and reported up to AY 2017-18 are allowed on deduction. No previous investments.

What are the existing options to tax saving on equity investments in 2025?

With the abolishment of Section 80CCG, a large number of taxpayers seek the option of deducting the tax on the amount invested in the stock market or mutual funds. The following are the favourable options in 2025:

What tax planning opportunities are there in regard to equity investing?

Equity Linked Savings Scheme (ELSS) under Section 80C

• ELSS is a form of diversified equity mutual fund, which provides mandatory locking in of three years.
• When it comes to maximum 1 lakh and fifty thousand rupees can be deducted under Section 80C.
• It is open to every person and HUF.

National Pension System (NPS) under Section 80CCD(1B)

• NPS gives deduction up to fifty thousand rupee additional to 80c.
• Personal, corporate and government NPS accounts.

Unit Linked Insurance Plans (ULIP)

• With insurance and investment together, ULIPs (Unit Linked Insurance Policies) help in tax saving under Section 80C.
• Direct investment into equity do not have any special deduction but may find them tax efficient in tax exemptions of long term capital gain.

Expert Insight

You may not have known. The three year lock in and market linked returns makes ELSS mutual funds now the most popular tax saving equity product.

Who is to Explore ELSS versus Former Section 80CCG in 2025?

ELSS is the closest option to Section 80CCG given that you have missed it in the past or would like to invest in equities today, but at the same time save tax. Let’s compare:

What to consider to make tax saving investments as a tax payer in 2025?

Let the following points help you to take the best out of equity and market-linked investments:

• Invest as early as possible in the year and not in March end.
• Among the salaried and professionals demographics, ELSS is the market leader in the tax savings under Section 80C.
• One should always monitor the requirement of locking in, liquidity of a product and risk before selecting any product.
• Compare ELSS or NPS schemes of different AMCs and banks across marketplaces- look at expense ratio, past performance, and SIP minimum all at a single point.

Can the Deduction Under 80CCG be Claimed 2025?

No, They cannot claim deduction as per 80CCG in terms of new investments since this deduction is phased out country wide.

People also ask

1. Is it possible to present both Section 80CCG and 80C deduction to a tax payer?
   Before, when one was qualified, both of them could be claimed. Section 80CCG is no longer on offer now.

2. Does the NRI qualify to Section 80CCG deduction?
   No, resident people could put forward the moment of availability of the section.

3. What were the most vital disadvantages of Section 80CCG?
   Poor awareness, lock in requirements and difficult process.

4. I am being asked to fill in Section 80CCG where I see it on form or utility, what should I do?
   Unless you are reporting a long term investment to comply with records or IT, ignore.

5. Does equity investment have tax saving today?
   Ya, in sections 80C and 80CCD, ELSS mutual funds, NPS, and ULIP.

6. How to compare ELSS mutual fund products in terms of the best returns?
   Use online markets where you can compare expense ratio, track record and minimum investment across mutual fund companies to select the right product in the target.

7. Section 80CCG was applicable in case of HUF or partnership firms?
   It was not available to the world at large but was limited to persons residing within.

8. Does the lock in of old RGESS investments still stand?
   The original lock in period would still apply to pre withdrawal of the scheme investments.

9. Does Section 80ccg deduction scheme make a comeback in the future?
   Nothing said at government level; nothing on a plan or proposal up to 2025.

First Hand Experience Content

The ever changing eligibility was a main problem, the low eligibility clarity on the retail investors and complication of lock in tracking by the brokers. It is seen that many who had a chance to make use of the benefit did not and even in most cases people would end up breaking lock in norms by wrongly assuming that the action needs to be taken due to lack of timely informations given by the brokers. When it was phased out, more ELSS funds were adopted which are easy and more widely accepted.

Sources:

• INCOME TAX ACT,
• INDIA OFFICIAL DOCUMENT Section 80CCG
• Budget papers and revision of income tax
• Government of India