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Where to Invest to Avoid Capital Gains Tax in India

In the 2018 EU budget, former finance minister Arun Jaitley reintroduced the long-term capital gains tax on equity investments. As a result, returns were previously tax-free if the investment was held for a year or more before being repaid. This exemption applies if the capital assets are not residential properties. You can take advantage of this exemption if you decide to invest all the consideration in a property. If you recently traded your property and want to save on taxes, you can continue to invest in certain financial assets. Investing in such financial assets has the power to save your hard-earned capital gains, as these long-term capital gains are exempt under section 54EC of the Indian Income Tax Act, 1961. This long-term capital loss can now be deducted from the long-term capital gains you report in the same year or carry forward the loss for the next 8 valuation years. The profit or profits you make by selling a capital asset are called a capital gain. Capital gains can be divided into two types: short-term capital gains and long-term capital gains, depending on the length of assets you still have. In the case of equity funds, long-term gains are only taxable if your return on equity exceeds Rs. 1 lakh in a financial year.

So, if your long-term capital gains from equity funds are less than or equal to Rs. 1 lakh in a financial year, you will not have to pay capital gains tax on your returns. This is the basis of the tax collection strategy in equity funds. Short-term profits you make are also subject to tax. Tax levied on short-term profits or gains you make selling capital property is called short-term capital gains tax. A short-term term is a period of less than 36 months. Now, if you buy back your investments on March 1, 2021, you will not have to pay capital gains tax as profits are Rs 75,305 and profits up to Rs 1 lakh in a financial year are exempt from tax. Taxing long-term capital gains was an important policy decision that could impact the mindset of a long-term investor who had invested his savings in the hope of avoiding taxes.

Thus, measures were also taken in the budget to protect the investments of those who had invested their savings in the market, in order to take advantage of the policies of the previous regime by introducing the “grandfathering rule”. Investing in Capital Gains Account Scheme (CGAS) is another way to save capital gains tax on real estate sales. This program is perfect for individuals who cannot invest in a brand new property before filing their tax return, and this system offers great relief to taxpayers. Long-term investors who invest their savings obviously enjoy slightly more advantages than short-term investors. Short-term investors are taxed at a flat rate of 15% of their capital gains. Until 2018, long-term capital gains were completely exempt from tax. Any share or interest held for a period of more than one year can be sold at a tax-free profit. This measure was taken to promote liquidity liquidity in the markets and increase domestic wealth. However, Budget 2018 decided to take a different approach to this strategy and decided to tax long-term capital gains as well, with all capital gains from investments held for more than one year taxed at 10%. Then, compare that value to the cost at which you bought the stock, which is ₹10,000, and choose the higher of the two.

The acquisition cost would therefore be ₹12,000, which would increase the purchase cost by ₹2,000. Now, calculating long-term capital gains by applying the universal formula would be: selling a property is an important and expensive task in itself, and the fact that you are taxed on your capital gains can be a big concern. An investment made when you acquire land is considered capital property, and when you trade it, the resulting profits are called capital gains. Capital gains tax can be divided into long-term and short-term capital gains. The profits you make from an investment over a long period of time are called long-term capital gains. These are capital gains from long-term capital assets held for 1 to 3 years. A fixed asset is tangible or intangible property acquired over the long term as an investment. Capital assets are used as the basis for calculating capital gains. Under the Income Tax Act, you can include the following in capital assets. Tax collection is the strategy of selling a portion of your equity fund shares each year for long-term gains, and then reinvesting the proceeds in the same fund. You can now redeem your investments.

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