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    Home»Equities»Make Your Equity Investments Work for You: A Tax-Saving Guide
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    Make Your Equity Investments Work for You: A Tax-Saving Guide

    Finance KhabarBy Finance KhabarFebruary 20, 2024No Comments2 Mins Read
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    tax-efficient equity investment strategies for maximizing returns in 2024.
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    Did you know that your equity investments could also be a key to saving on taxes? Yes, that’s right! By making smart moves before the fiscal year ends on March 31, you can optimize your tax savings, especially when it comes to your equity shares or equity-oriented mutual funds.

    Firstly, it’s important to understand that any long-term capital gains (LTCG) you earn from these investments are tax-exempt up to Rs 1 lakh. This is applicable only if you’ve held these investments for more than 12 months. But remember, this benefit resets every financial year, meaning you can’t carry it over to the next year. Therefore, if you’ve seen substantial gains, consider realizing some of them before the year ends to maximize your tax benefits.

    Calculating capital gains might sound daunting, but it’s quite straightforward. Essentially, your gain is the difference between the sale price and the cost of acquisition. A special note for investments made before January 31, 2018: the cost of acquisition is considered to be the market price on January 31, 2018, due to the ‘grandfathering clause’. This could significantly impact your taxable gains.

    Now, here’s a strategy that could be a game-changer: tax harvesting. This legal strategy involves selling your equity investments to realize gains within the tax-exempt limit and then re-investing. This way, you reset the purchase price to the current market value, potentially reducing future taxable gains.

    For example, if you bought shares at a lower price and they’ve appreciated within the year, selling them before March 31 could keep your gains within the exempt limit. You can then buy back the shares, continuing your investment journey without bearing an extra tax burden.

    By staying informed and making timely decisions, you can make the most of your investments while optimizing your tax situation. It’s all about planning and acting before the financial year wraps up!

    (Image/Pixabay)

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