5 LAKHS profit in stocks? Pay 0 TAX #shorts #tax #stockmarket

Pay 0 TAX on 5 LAKHS profit in stock market? 💸
Yes, it is possible :)

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If you invest in equities [through direct stock or mutual funds] then you have to pay TAX on the profits you make.

This can be:

• Long Term Capital Gain Tax: for shares held for more than 1 year - at 10%; OR
• Short Term Capital Gains Tax: for shares sold before 1 year - at 15%

But, there is a strategy to avoid paying taxes on long term capital gains and make them zero.

➡️TAX HARVESTING

Under the current laws [S.112, Income Tax Act] LTCG upto ₹ 1 LAKH are EXEMPT from tax altogether.

And you can use this to reduce your tax liability.

How? Let’s understand from a situation:

• You invest ₹ 1Lakh in stocks/equities
• You make a profit of ₹ 1 Lakh
• Now you sell your entire holdings to realise the profit
• Since your profit is ₹1L, your tax will be 0

Now here comes the interesting part-

After you sell your shares (with profit), reinvest the same IMMEDIATELY

➡️This will start a new 1 year period and ensure that your compounding remains intact

• Your reinvested amount is ₹2 Lakh
• After 1 year, you again made a profit of ₹1 Lakh
• Repeating the same process, selling your shares and realise the profits

And since your profits are under the exemption limit, your tax liability will again be 0.

Doing this each year will save you BUCKET LOADS of taxes by utilising the exemption limit.

NOTE: This can be a complex strategy and is difficult to explain in under 1 minute. You can book a call if there are any specific questions:)

[RahulYadav-twmc]

Kuch bhe bolte hai ye log ... 😂😂😂😂 Compounding bhe kuch hota h.... 😂😂😂

[BeingAshutoshRoutray]

But one day when you will redeem all your profits...that day you have to pay tax

[dhawalbarot]

what should be timing between buying and selling? lets say i sale today at 11:38 and buy at 11:39 - will it bw considered tax harvesting?

[Lalit_Payal]

When you sell your share and again but it's value will increase so less shares how profit 1 lac will make

[Ematics-de]

Madam please learn math before teaching...1 lakh LTCG already tax free hai to what's the use to reinvest...you can use it without paying tax and same thing you can continue...because at last you are investing exempted money only