SAVE TAX.SAVE MONEY.
Introduction
Recently we have seen that government has issued various notices and demand order denying the benefit of rebate u/s 87A under income tax act for short term capital gain and therefore taxpayer has to pay 15% tax on STCG in Financial year 2023-24. Further from the year 2024-25 this rate has been increased to 20% along with no benefit of rebate, therefore now taxpayers are in trouble how to save tax on STCG. Here are some tips to save tax:-
Ways to Save Tax
Strategy 1. Take the benefit of basic exemption limit of Rs.3 Lac i.e.. for a individual or HUF wherever possible you have to book STCG in those demat accounts where there is no other income other than STCG, taxpayer has to be intelligent enough to do such a planning.
Everyone who is trading in share market will have multiple accounts, therefore he has to be brilliant enough to sell securities and book profit in those accounts who does not have any other income to take the benefit of basic exemption limit.
Example
Mr. A has income of Rs.0 (Normal Income) then tax will be NIL
Mrs.A-1 has 7Lac income, Rs.3 Lac is STCG and Rs.4Lac is normal income then taxpayer has to pay tax @ 15% on 3Lacs =Rs.45,000/-(excluding cess)
However if he do tax planning and take Rs.4 Lac income out of 7lac in his account and leave behind 3lac in her wife account, then tax payable will be NIL in both the accounts and thereby saving tax by using basic exemption limit
Strategy 2. Suppose Mr. A has earned Rs.10 Lac STCG in F.Y.2024-25 and having no other income and wants to save tax of Rs.1,05,000/- (15% on Rs.7 Lac), then he can do one thing that if there are some securities from his portfolio which are in red zone that traded at below price, he can sell them and book loss and then repurchase them on next day, thereby his portfolio remains same and he needs not to pay tax as loss booked will be setoff against profit made and thereby saving taxes
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