March end is approaching fast, and the race to save tax. Given below is the ‘thumb-rule guide to help you to tax saving and interest on late payment of taxes at the filing of your income tax returns. We have placed the pointers in chronological order so that it takes us through a seamless flow:
So, Let's learn how to save tax:-
- Get capital gain/loss statements from your PMS provider / MF distributor/ stockbroker for the period from April 1, 2020, till March 15, 2021. One may consider the same across various family members.
Note: It is available in GEPL Wealth client login as well as with your dealer / RM.
Understand Short Term and Long Term Capital Gain.
Note: GEPL Wealth - Provides separately Short term, long-term as well as speculative gain and loss Reports for Financial Year.
- Also see your past IT returns. Do you have to carry forward ST/ LT losses? In past years focus only on past eligible losses which were carried forward as gain were in past were tax-free or else tax paid on it. Capital losses can be carried forward up to 8 years.
- Past short losses can be set off against current LT gains. But do not use this, unless this is the last year for carrying forward of losses. It’s better to carry forward the losses as the set-off will be better for the future.
- Long Term gains from shares / equity / debt MFs / Real Estate / gold can be adjusted against:
- Long-term losses from other shares or equity MFs / Debit MFs/ Real Estate/ gold of current as well as past eligible carrier forward losses. ALSO
- Short term losses from shares/ equity / debt MFs / Real Estate/ Gold / FOF of current and past eligible carried forward losses. But use this one cautiously
- Short term gains from shares/ Equity / Debt MFs / Real Estate/ FOF / gold etc. can be adjusted
- Against only short-term losses of other similar assets of the current and eligible carried forward losses only.
- If you have realized Short Term (ST) / Long Term (LT) gains for the current financial year then
- Firstly see you can set-off with current as well as carry forward losses
- Secondly, see you can convert unrealized short term or long term losses into realized by selling existing direct equity or mutual funds and may repurchase those direct equity or mutual fund once again
- If you have realized Short Term/ Long Term losses then either you can carry them forward or can set off these losses by converting unrealized ST/LT gains into realized ST/LT gain either by selling shares or switching plans in case of MFs.
Note: GEPL Wealth - Provides unrealized Short term, long-term gain and loss Report for Financial Year as demanded.
- Just remember that ST gains can be set off against only ST carried forward losses of past or ST losses of the current year. Else all other ST/ LT losses and gains can be adjusted against one another.
- To get the benefits of Long Term Capital Gain from the equity segment (STT Paid) up to Rs. 1 Lakh is tax-free. It is advisable to book at least that much net gain in every family member's account for each financial year.
So this blog was about the top 10 capital gain tax-saving tips for the tax savings season of 2021! Grab the opportunity to save tax now. Invest in the stock market via a free Demat account click here.