Reduce CAPITAL GAIN TAX by 90%! | Tax Harvesting EXPLAINED! | Ankur Warikoo Hindi
warikoo・2 minutes read
Tax harvesting is a strategy for investors to save on taxes by selling investments strategically and offsetting gains with losses, resulting in substantial tax savings over time. Utilizing tools on brokerage platforms like Zerodha can help identify opportunities for tax savings, and accumulated losses can be carried forward for up to 8 years to provide long-term benefits.
Insights
- Tax harvesting is a strategic method for investors to minimize taxes by selling investments strategically to realize gains below ₹1 lakh and offsetting capital gains with capital losses, leading to significant tax savings over time.
- Utilizing tax harvesting tools on brokerage platforms like Zerodha and carrying forward accumulated losses for up to 8 years can provide long-term tax-saving benefits, allowing investors to save a substantial amount on taxes while growing their investments efficiently.
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Recent questions
What is tax harvesting?
Tax harvesting is a strategy used by investors to save on taxes by selling investments strategically.
How does tax harvesting work?
Tax harvesting involves selling investments strategically to reduce tax liability.
What are the benefits of tax harvesting?
Tax harvesting can lead to substantial tax savings and help investors grow their investments efficiently.
How can investors access tax harvesting tools?
Investors can utilize tax harvesting tools on brokerage platforms like Zerodha to identify opportunities for tax savings.
Can tax harvesting be applied to US stocks?
Yes, tax harvesting can be applied to US stocks, allowing investors to carry forward losses for up to 4 years to offset future profits and minimize tax liabilities.
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Summary
00:00
"Tax Harvesting: Smart Investors Save on Taxes"
- Tax harvesting is a technique used by smart investors to save on taxes, especially in stock market investing.
- Taxes applicable in stock market investing include capital gain tax, which is recognized on sale, and can be short-term (15% tax) or long-term (10% tax).
- In 2018, the government introduced a 10% tax on long-term capital gains exceeding ₹1 lakh, creating an opportunity for tax savings.
- Tax harvesting involves selling investments to realize gains below ₹1 lakh to avoid taxes, and offsetting capital gains with capital losses to reduce tax liability.
- By actively tracking gains and selling investments strategically, investors can significantly reduce their tax burden.
- Selling investments to realize gains below ₹1 lakh annually can lead to substantial tax savings over time.
- Offsetting capital gains with capital losses allows investors to pay taxes only on the net gain, resulting in significant tax savings.
- Investors can access tax harvesting tools on brokerage platforms like Zerodha to identify opportunities for tax savings.
- Accumulated losses from tax harvesting can be carried forward for up to 8 years, providing long-term tax-saving benefits.
- By utilizing tax harvesting strategies effectively, investors can save a substantial amount on taxes while continuing to grow their investments.
16:16
"Tax Harvesting Strategies for US Stocks and Mutual Funds"
- Tax harvesting can be applied to US stocks as well, allowing for the carrying forward of losses for up to 4 years to offset future profits and minimize tax liabilities.
- When engaging in tax harvesting with mutual funds, it's crucial to consider exit loads, opt for funds with zero exit loads, and be aware of restrictions on lump sum buying versus SIP.
- Converting regular mutual funds to direct ones can reduce expenses, and it's important to note that long-term capital losses can only offset long-term gains, while short-term losses can offset both short-term and long-term gains.
