Last year has been exceptionally good for stock market investors. I hope you made handsome gains in your Equity and Mutual Fund investments last year.
As the financial year is about to end, it is particularly important to review your portfolio and calculate the capital gains earned during the year. Here are some tips to reduce your tax liability:
Book long-term capital gains
Long-term capital gains in equities and equity mutual funds up to Rs. 1 Lakh per year are Tax-free.
If your booked long-term capital gain during this year is less than Rs. 1 Lakh, do book profits in some of your other long-term investments so that the total booked profit is at least Rs 1 Lakhs. Booking profit now will reduce long-term capital gain tax liability in future years.
If you do not wish to book profits in these investments yet, you can buy the same stocks / Equity Mutual Funds again on the next day. Or you can buy them simultaneously in a family members account.
Book short-term capital loss
Both short-term capital gain and long-term capital gain are adjustable against short-term capital loss.
If you have a capital-gain tax liability (long-term or short-term), sell your stocks or equity mutual funds, which were purchased less than one year ago and are still at a loss. Booking these losses will reduce your overall capital gain tax liability.
If you do not wish to book loss in these investments at current prices, you can buy the same stocks / Equity Mutual Funds again on the next day. Or, you can buy them simultaneously in a family members account.
" Planning = Saving "
TR Capital, Hisar