Section 80CCG: A Complete Guide for Indian Taxpayers in 2025

Tax planning is a major concern for Individuals and HUFs in India. Among the various income tax deductions, Section 80CCG was once a key provision designed to encourage retail investment in equity. Whether you are a salaried professional, self employed, or a tax planning consultant, understanding the journey, status, and relevance of Section 80CCG in 2025 can save time and clear confusion during tax filing.

This article gives a simple, clear breakdown of Section 80CCG, its past benefits, and its status now, while addressing people’s top questions about deductions, eligibility, alternatives, and useful comparisons for 2025.

What is Section 80CCG? Is It Still 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 allowed eligible taxpayers to claim a deduction if they invested in notified equity shares or units of equity oriented mutual funds. However, this benefit was available under specific conditions and for a limited period.

Is Section 80CCG Active for FY 2024-25?

No, Section 80CCG is not available for tax benefits in Financial Year 2024-25 (Assessment Year 2025-26). The scheme was phased out, and deduction under 80CCG cannot be claimed for investment made after Assessment Year 2017-18. However, taxpayers may see old mentions of this section in online tax forms or guides, leading to confusion.

Did you know?

When launched, Section 80CCG was a first of its kind to specifically target first time investors in the equity market, with the dual aim of growing investment culture and offering extra tax saving beyond Section 80C.

What Was the Main Purpose of Section 80CCG?

The central objective of Section 80CCG was twofold:

• Motivate small taxpayers to participate in Indian equity markets.
• Offer additional tax saving instruments for first time equity investors, apart from Section 80C and 80CCD.

Individuals who invested in specified securities received a tax deduction over and above the fifty thousand rupees limit offered under Section 80C.

Who Was Eligible to Claim Section 80CCG Previously?

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

• Resident Individual with annual gross income not exceeding 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)
• Invested in eligible listed equity or specified mutual funds
• Did not claim the deduction more than three consecutive years from the year of first investment

And of course, investments needed to be locked for a minimum of three years.

Expert Insight

Even then, the awareness level about Section 80CCG was quite low among both urban and rural taxpayers. Most eligible persons either missed out or never maximized the utilization of this deduction.

What Were the Key Features or Highlights of Section 80CCG?

Section 80CCG had some unique features, which separated it from other popular deductions like Section 80C.

• Tax deduction was fifty percent of the invested amount (maximum investment capped at fifty thousand rupees per year).
• Only retail, first time investors within specified income limits could claim.
• There was a lock in period of three years for the investment.
• Only investments in notified equity shares and select mutual funds qualified.
• Deduction available for maximum of three consecutive assessment years.
• The section functioned as an additional deduction over Section 80C.

How Did the 80CCG Deduction Work In Practice?

Suppose you invested rupees fifty thousand in eligible RGESS mutual funds in FY 2016-17.

• You could claim a deduction of fifty percent i.e. rupees twenty five thousand under Section 80CCG for that assessment year.
• This benefit was over and above the rupees one lakh fifty thousand deduction under Section 80C.

Pros:

• Encouraged first time investors to enter equity market
• Provided additional fifty percent tax deduction on eligible investment

Cons:

• Scheme design was complicated for the average taxpayer
• Limited eligible securities and strict lock in period
• Income ceiling limited its audience
• Now discontinued, so not relevant for new investments

Did you know?

Lock in under the RGESS used to trouble many as accidental withdrawals or trading could reverse the tax deduction and invite penalties.

Why Was Section 80CCG Withdrawn by the Government?

The government gradually phased out RGESS and Section 80CCG deduction due to the following reasons:

• Low participation rate, with most new investors preferring mutual funds or SIP under Section 80C ELSS
• Complexity of lock-in rules, manual verification by brokers, and frequent investor complaints
• Existing provisions like 80C, 80CCD(1B) already covered investment needs for most persons
• Focus shifted to more inclusive and user-friendly tax saving options

This discontinuation was announced in Union Budget 2017.

People Also Ask

Can I claim Section 80CCG for investments made before 2017? No, only deductions for investments made and reported till AY 2017-18 are valid. Current investments are not eligible.

What Are the Current Alternatives for Tax Saving on Equity Investments in 2025?

Since Section 80CCG has been discontinued, many taxpayers look for ways to get tax deduction on stock market or mutual fund investments. Here are popular alternatives available for 2025:

What Tax Saving Options Are Available for Equity Investments Now?

1. Equity Linked Savings Scheme (ELSS) under Section 80C

   • ELSS is a type of diversified equity mutual fund with a compulsory lock in of three years.
   • Investments up to one lakh fifty thousand rupees qualify for Section 80C deduction per year.
   • Available to all individuals and HUFs.

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

   • NPS offers up to fifty thousand rupees deduction over and above 80C.
   • Corporate, government, and personal NPS accounts eligible.

3. Unit Linked Insurance Plans (ULIP)

   • ULIPs, combining insurance and investment, offer tax saving under Section 80C.

4. Direct investment in equities do not offer any special deduction but can be tax efficient through long term capital gain exemptions.

Expert Insight

Did you know? ELSS mutual funds are now the most popular tax saving equity product, thanks to their three year lock in and market linked returns.

Who Should Explore ELSS vs. Former Section 80CCG in 2025?

If you have missed Section 80CCG in the past or want to start investing in equities today while also saving tax, ELSS is the most similar alternative. Let’s compare:

How Can Taxpayers Plan Tax Saving Investments in 2025?

To get the best out of equity and market-linked investments, keep these tips in mind:

• Begin investments early in the year, do not wait till March end.
• ELSS is the market leader for Section 80C tax savings among salaried and professionals.
• Always track the lock in requirement, product liquidity, and risk before choosing any product.
• Use online marketplaces to compare ELSS or NPS options from multiple AMCs and banks—check expense ratios, historic returns, and minimum SIP size all in one place.

Is There Any Way to Claim Deduction Under 80CCG in 2025?

No, claiming deduction under Section 80CCG is not possible for new investments as it has been phased out nation wide.

People Also Ask

What if I had earlier claimed 80CCG and broke the lock in period? You are liable to pay back the deducted amount along with interest in the return for the year of violation.

Can HUFs or NRIs claim 80CCG? No, only resident individuals (not HUF, not NRI) below the specified income could claim if eligible before AY 2017-18.

What Should Old 80CCG Investors Know in 2025?

If you took Section 80CCG deduction years ago, these points are relevant for you now:

• Completed or past investments under RGESS do not need any further action if lock in is completed.
• No further tax deduction can be claimed for these investments in your ITR for AY 2025-26.
• Keep demat statement and investment proof as reference for past claims, in case of IT scrutiny.

Did you know?

The lock in for old RGESS investments used to be tracked in demat statements under a separate ‘RGESS’ tab, still visible in some brokers’ platforms today.

Pros and Cons of Section 80CCG: Quick Reference

Key Positives

• Brought new retail investors to formal market system.
• Provided tax savings on equity, which was previously not encouraged for small taxpayers.

Main Negatives

• Strict eligibility means actual reach was very limited.
• Complicated product features discouraged mainstream adoption.
• Currently discontinued, so only relevant in historical tax records.

Section 80CCG vs. Popular Tax Deductions in 2025: Comparison Table

TLDR / Quick Recap: Section 80CCG in 2025

• Section 80CCG deduction is not available for any new investment you make now.
• It was aimed at new retail investors in select equities, but phased out after AY 2017-18.
• The most similar, best available alternative is investing in ELSS under Section 80C, NPS, or traditional options.
• If you are planning tax investments in 2025, Section 80CCG is only relevant for historic records and not for fresh tax planning.

People Also Ask: FAQs on Section 80CCG

1. Can a taxpayer claim both Section 80CCG and 80C deduction?
Earlier yes, if eligible, one could claim both. Now Section 80CCG is not available.

2. Is Section 80CCG deduction valid for NRIs?
No, only resident individuals could claim when the section was available.

3. What were the biggest drawbacks of Section 80CCG?
Low awareness, strict conditions, and cumbersome lock in process.

4. If I see Section 80CCG in a utility or form, should I fill it?
Ignore unless you are reporting an old investment for record or IT scrutiny.

5. Are there tax saving options on equity investments today?
Yes, ELSS mutual funds, NPS, and ULIP under Section 80C and 80CCD.

6. How can I compare ELSS mutual fund products for best returns?
Use online marketplaces that let you compare expense ratios, track record, and minimum investment from multiple mutual fund companies to pick right product for your goal.

7. Was Section 80CCG applicable to HUF or partnership firms?
No, it was restricted to resident individuals only.

8. Is the lock in for old RGESS investments still valid?
For investments made before withdrawal of the scheme, the original lock in period still applies.

9. Will Section 80CCG deduction scheme return in future?
No word from government; as of 2025 there is no plan or proposal.

First Hand Experience Content

As a regular taxpayer and someone advising clients during the active years of Section 80CCG, the main challenge was ever changing eligibility, low clarity amongst retail investors, and brokers’ complicated lock in tracking. Many who actually qualified missed claiming the benefit, and often people would accidentally violate lock in norms due to lack of timely guidance from brokers. After its phase out, the adoption of ELSS funds increased, which are simpler and broader in appeal.

Source:

• Income Tax Act, India – Section 80CCG Official Document
• Budget documents and income tax updates, Government of India