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Tax Loss Harvesting India
Tax harvesting is utilising the duty-free window of Rs 1 lakh to reduce overall LTCGtax.However, you can vend your investment, realise that gain, If you have invested and gained Rs 1 lakh. By doing so, your net investment remains unchanged, but you shield duty on long term capital earnings worth Rs 1 lakh every time.
Let's take an illustration to understand this better. Suppose an investor has Rs 8 lakh invested in equity finances which gets appreciated to Rs 9 lakh. To shield the earnings worth Rs 1 lakh from taxation, the investor would redeem Rs 9 lakh andre-invest it in equity. The investor will not have to pay duty on this Rs 1 lakh this time being exempted. And for future, the new cost of purchase would be considered as Rs 9 lakh, rather of Rs 8 lakh- shielding the complete gain of Rs 1 lakh from taxation.
numerous investors might suppose that this is a veritably useful exercise to do. But that isn't the case. We analysed the strategy in great detail in one of our aged stories and compared two scripts over a long period of 18 times. Check the story then. One script is where an investor follows duty harvesting and does all the hard work every time. The net proceeds were advanced by only 3 per cent in case of duty harvesting. And in terms of the periodic return, the difference was miniscule just0.29 chance points.
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