Section 80ccg Meaning and Deduction

Section 80CCG: Meaning, Eligibility, Deduction

Section 80CCG is discontinued; understand its meaning, past eligibility, deduction limits, and current tax-saving alternatives

Written by : Knowledge Centre Team

2026-02-22

1056 Views

6 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Note: Deduction under section 80CCG has been discontinued starting from 1st April 2017,  and no new investments have been eligible for deductions under this section since then.

Section 80CCG was introduced to encourage first-time retail investors to participate in the equity market by offering a limited tax deduction. However, the benefit was available only for a specific period and has since been withdrawn.

If you are investing in equities for the first time, you should be aware that the Section 80CCG deduction no longer provides any tax benefit for FY 2025-26 (AY 2026-27). This deduction was once allowed under section 80CCG of the Indian Income Tax Act, 1961, but the provision has since been phased out. So, what was the meaning of section 80CCG and who was eligible to claim a deduction under this section before its discontinuation?

Key Takeaways

  • Section 80CCG has been discontinued from 1 April 2017 and offers no deduction for FY 2025–26 (AY 2026–27)

  • The deduction was earlier available under the Rajiv Gandhi Equity Savings Scheme (RGESS) for first-time retail investors

  • Eligible investors could claim 50% of the investment (up to ₹25,000), subject to income and lock-in conditions

  • The scheme applied only to specified equity shares, ETFs and mutual funds notified under RGESS

  • Taxpayers must now rely on currently active provisions such as Sections 80C and 80CCD for tax-saving investments

What is Section 80CCG?

Section 80CCG was introduced to encourage first-time investors to put their money into the Indian stock market. It was introduced to help individuals develop a habit of investing in equities, which are considered a long-term wealth creation asset class. The minimum investment period was 3 years,  as the scheme carried a lock-in period to become eligible for the deduction. 

Earlier, eligible investors could claim a 50% deduction on the amount invested, up to a maximum of ₹50,000, for three consecutive assessment years.

Maximize Your Tax Savings - Talk to an Expert

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

Deductions Under Section 80CCG

Earlier, if you were a first-time investor, you could consider investing some portion of your income into equity instruments under the Rajiv Gandhi Equity Savings Scheme (RGESS). In return, the government allowed up to 50% of the invested amount to be deducted from your taxable income, subject to prescribed limits.

The scheme, under section 80CCG, named the Rajiv Gandhi Equity Saving Scheme, allowed a maximum deduction of up to ₹25,000 per annum (being 50% of the maximum eligible investment of ₹50,000). This deduction was over and above the deduction of ₹1.5 lakh allowed under Section 80C of the old tax regime.

For example, Mr Chandrakanth Shenoy, a first-time investor, invested ₹50,000 in an equity scheme. Mr Shenoy was then eligible to deduct 50% of his investment, i.e., ₹25,000, from his taxable income. His taxable income was ₹7,50,000 before his investment, but after the investment, his new taxable income would have become ₹7,25,000.

Learn more about the Saving Schemes

Who Could Benefit From Section 80CCG?

If you could satisfy the following eligibility criteria of Section 80CCG of the Income Tax Act, 1961, you could avail of income tax deductions:

1. You were investing in equities for the first time

2. Your gross total income was less than or equal to ₹12 lakhs per annum

3. You were required to stay invested for at least 3 years

4. You were supposed to invest in equity or equity-oriented funds

5. You may invest in stocks listed under BSE 100, public sector undertakings, ETFs and Mutual Funds

It is important to note that Section 80CCG has been discontinued with effect from 1 April 2017, and no new investors can claim this deduction for FY 2025-26 (AY 2026-27).

trivia-img

Did You Know?

RGESS saw far lower participation than expected, which contributed to its phase-out in 2017 due to limited investor uptake and complexity


Source: ET

Cut Tax Stress 46,800

Alternatives to Section 80CCG

If you are exploring alternatives to 80CCG, there are a plethora of options to choose from. These options also have some tax benefits under different sections of the Indian Income Tax Act.

  • Mutual Funds: Mutual funds raise capital from various investors and institutions, then invest in equities. Mutual funds may be focused on specific industries or indices, and you can choose the type of fund depending on your risk appetite and targeted return.

    Mutual funds do not offer guaranteed returns. However, debt mutual funds that invest in government securities, corporate debentures and bonds may carry relatively lower risk compared to equity funds. Equity Linked Savings Scheme (ELSS), a type of mutual fund with a lock-in period of 3-years, is eligible for deduction from taxable income under section 80C of the Indian Income Tax Act (available only under the old tax regime).
  • Unit Linked Insurance Plan (ULIP): ULIPs offer life cover plus a return on investment. The best part of ULIPs is the diversified portfolio of equity and debt funds, which you can change multiple times throughout the investment tenure. In case of your unfortunate demise, your nominee would receive the sum assured or else you will receive the fund value at the end of the policy term.

    Amounts paid towards premiums are deductible under Section 80C (under the old tax regime), subject to overall limits and premium conditions (premium not exceeding 10% of Sum Assured for policies issued on or after 1 April 2012) from taxable income. Meanwhile, maturity proceeds are exempt from tax under section 10(10D), subject to conditions, including the ₹2.5 lakh annual premium threshold for ULIPs issued on or after 1 February 2021.

    Other features of this versatile tax-saving investment include:
    1. ULIPs allow tax-free partial withdrawals after five years of holding
    2. You can also schedule partial withdrawals from ULIPs, like at specific milestones
    3. Automatic portfolio management for equity investors to keep their market risk in check
    4. Long-term investment horizon options (policy tenure depends on product terms)
    5. Certain plans may offer loyalty additions or bonuses, depending on the insurer and product structure
  • National Pension Scheme (NPS): Contributions to NPS are deductible under sections 80C and 80CCD(1b) of the old tax regime, from taxable income. Investment of up to ₹50,000 in an NPS Tier 1 account is deductible, under section 80CCD(1B), from taxable income. ₹1.5 Lakhs invested in NPS can be deducted, under section 80CCD(1), from taxable income. Therefore, a total of ₹2 Lakhs can be deducted to compute taxable income. At the time of maturity, the tax treatment is as follows:

    Note:     Deductions under Sections 80C and 80CCD(1B) are available only under the old tax regime. Under the new tax regime, these deductions are not applicable.

    Under the new tax regime (Section 115BAC), deduction under Section 80CCDD(2) is allowed, but Section 80C benefits are not available. 
    1. Tax benefits on partial withdrawal: You may make any partial withdrawal from your NPS Tier I account before the age of 60. Any amount up to 25%of your contribution is exempt from tax.
    2. Tax benefit on Annuity purchase: Whatever amount you invest to purchase an annuity is 100% exempt from tax. However, annuity income/payouts that you receive later on will be subject to income tax.
    3. Tax benefit on lump sum withdrawal: At retirement (age 60), up to 60% of the accumulated corpus can be withdrawn tax-free. The remaining 40% must be used to purchase an annuity (taxable on receipt).

Several investment options focus on equities and thus give you inflation-beating returns in the long run. These instruments also offer tax benefits, thus making them even more lucrative. You must invest in a wide variety of such options so that your investments are not only diversified but also get the best benefits offered by each option.

Conclusion

Section 80CCG was introduced to encourage first-time retail investors to participate in the equity markets through a structured tax incentive. However, with its discontinuation from 1 April 2017, section 80CCG of the Income Tax Act no longer offers any deduction for FY 2025–26 (AY 2026–27).

While the equity saving scheme 80CCG served as an entry point for new investors at the time, taxpayers today must look to currently available provisions such as Section 80C, Section 80CCD, and other notified instruments, depending on their chosen tax regime.

Understanding which deductions are active and which have been phased out is essential for accurate tax planning. Before making investment decisions, it is advisable to evaluate eligibility, lock-in conditions and tax implications under the prevailing rules to ensure compliance and optimise benefits.

Glossary

  1. Section 80CCG: A discontinued tax provision that allowed first-time investors a deduction on eligible equity investments
  2. Rajiv Gandhi Equity Savings Scheme: A government-notified scheme offering tax deduction on select equity investments for new investors
  3. Gross Total Income: Total income computed before claiming deductions under Chapter VI-A of the Income-tax Act
  4. Lock-in Period: Mandatory holding period during which an investment cannot be sold or withdrawn
  5. Equity Linked Savings Scheme: A tax-saving mutual fund with a 3-year lock-in, eligible for deduction under Section 80C
glossary-img
Uncertain About Insurance?

FAQs

The 80ccg deduction limit was 50% of the amount invested in eligible securities under RGESS, subject to a maximum deduction of ₹25,000 per financial year. This meant the maximum eligible investment considered was ₹50,000. However, this benefit was discontinued from 1 April 2017 and is not available for FY 2025-26 (AY 2026-27).

No, Section 80CCG is no longer valid for income tax purposes. The provision was discontinued with effect from 1 April 2017, and no new investments qualify for deduction under this section for FY 2025–26 (AY 2026–27).

Under the 80CCG Rajiv Gandhi Equity Scheme, eligible investments included equity shares forming part of the BSE 100 or CNX 100 indices, shares of specified public sector undertakings (PSUs), and select Exchange Traded Funds (ETFs) and mutual funds that were notified under the scheme.

However, since Section 80CCG was discontinued from 1 April 2017, these investments no longer qualify for any deduction.

Section 80CCG was different from other tax deductions because it specifically targeted first-time retail investors and offered a deduction only on eligible equity investments under the Rajiv Gandhi Equity Savings Scheme.

 

Unlike broader provisions such as Section 80C, which cover multiple instruments like ELSS, life insurance and NPS, Section 80CCG had strict income limits (₹12 lakh), a defined lock-in period and a capped benefit of ₹25,000 per year. It was also available for a limited period and has since been discontinued.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

What Is Tax Liability? Meaning, Calculation & Examples
05 Mar '26
1993 Views
7 minute read
Tax liability is the total tax payable after deductions and exemptions. Learn its meaning, how to calculate tax liability and how it affects ITR filing in India with examples for individuals.
Read More
Tax Saving
FATCA Declaration: Meaning, Eligibility & Filing Guide
25 Feb '26
66 Views
6 minute read
Understand FATCA declaration requirements, who must submit it, reporting rules for foreign financial assets, and why compliance is important for Indian taxpayers.
Read More
Tax Saving
Income Tax Rates in India: Latest Slabs & Comparison Guide
25 Feb '26
77 Views
6 minute read
Explore current income tax rates under old and new regimes, slab-wise comparisons, and practical tips to select the most suitable tax regime for your income profile.
Read More
Tax Saving
Short Term Capital Gains Tax & Calculation | STCG Tax India
23 Feb '26
10714 Views
11 minute read
Understand short term capital gains tax in India. Know how STCG is taxed, rates, and calculation for different assets under current tax rules.
Read More
Tax Saving
What Is TAN? How to Apply for TAN in India
23 Feb '26
1957 Views
10 minute read
What is TAN? Understand its structure, importance, and how to apply for a Tax Deduction and Collection Account Number (TAN) easily in 2026.
Read More
Tax Saving
What is EPF Form 10C? Meaning, Benefits, Eligibility
23 Feb '26
1411 Views
6 minute read
Learn about EPF Form 10C. Its meaning, benefits, and eligibility. Find out how submit form 10C online and how can help you with your Employee Provident Fund.
Read More
Tax Saving
Import Tax in India: Why Imports Are Heavily Taxed?
23 Feb '26
1970 Views
6 minute read
Understand why imports are heavily taxed in India, how import tax works, and the economic and policy reasons behind high import duties.
Read More
Tax Saving
Expenditure Tax in India: Meaning, Applicability & Examples
23 Feb '26
114 Views
6 minute read
Understand the concept of expenditure tax in India, when it applies, sectors affected, calculation approach, and practical examples to clarify its financial implications.
Read More
Tax Saving
TDS on Foreign Remittances: Rates, Limits & Rules Explained
23 Feb '26
36 Views
7 minute read
Learn how TDS applies to foreign remittances under LRS, applicable rates, thresholds, exemptions, and how these deductions affect your overseas payments and tax filing.
Read More
Tax Saving

Tax Savings - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness