new Delhi. Zerodha co-founder Nitin Kamat has advised investors to take advantage of tax-loss harvesting before March 31. This is a strategy by which investors can reduce their tax liability. Tax liability is being created on capital gains on investors from shares, so tax-loss harvesting is very beneficial.
Nitin Kamat in his tweet has suggested investors to reduce this tax liability. In the tweet, Nitin has written that investors should check whether they have received any Short Term Capital Gains (STCG), on which 15 percent tax is being made. If capital gains are being made, then the investor should check his portfolio and see if there is any such stock in his portfolio, which is making short-term losses. Sell the shares on which there is loss.
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What is Tax-Loss Harvesting? (what is tax-loss harvesting)
If an investor has made short-term capital gains on which he is liable to pay tax, he can reduce his tax liability by adopting a tax-loss harvesting strategy. For this, he will have to sell such shares of his portfolio, on which he is incurring loss. This means that the rate has come down compared to the price at which you bought the shares.
At present the short term capital gains tax is 15 per cent. If you sell a share within one year of purchase, then the profit made from it is called short term capital gain. Suppose an investor K The shares of the named company have been bought for Rs.100. After 9 months the price of that share increases to Rs 150. If you sell this share to earn profit then profit of Rs 50 will be called as short term capital gain.
The investor will have to pay short term capital gains tax on the profit of Rs 50 from the share. Its rate is 15 percent. In this way the tax will become Rs 7.5 (15 per cent of Rs 50). If an investor K If he had bought 1000 shares of the company, then he would have to pay a lot of tax. Paying 15% tax will reduce his total return. Here tax-loss harvesting can be of great help to the investor.
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this would be beneficial
There are such stocks in the portfolio of the same investor, which are giving him loss. He bought them within a period of one year. You can sell such shares at a loss. Let’s assume that an investor has b The company’s shares were bought a few months back. He had paid Rs 100 for a share. But, now the share price has come down to Rs 50. That investor will bear the loss caused by selling them. K Can be adjusted with capital gains from the shares of the company. This will reduce his tax liability.
Tags: personal finance, stock market
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