Tax loss
harvesting opportunity: 2019-20
If you hold stocks or mutual
funds in your portfolio that have unrealised losses, you can set off these
losses against realised profits on which you have to pay taxes. To do this, you
can book the losses, effectively reducing the realised gains and hence also
reducing the tax payable. This act of booking unrealised losses is called Tax
Loss Harvesting.
Introduction to Taxation
When you invest in the markets,
you potentially have two types of taxes —
1.
STCG (Short term capital gains tax) or tax on gains made by
selling stocks or Equity MF held for less than 1 year. Taxed at 15% of the
gain.
2.
LTCG (Long term capital gains tax) or tax on gains made by
selling stocks or Equity MF held for more than 1 year. First Rs 1lks of LTCG is
tax-free and taxed at 10% above Rs 1lks of LTCG per year.
Do go through the Markets
and Taxation module on Varsity for detailed information on taxation
when investing or trading.
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