Lower your tax outgo by offsetting losses in equity investments

economictimes.indiatimes.com:

equities, you can set off your losses against the gains and even carry residual losses to subsequent fiscal years. As the deadline of July 31 to file your income tax returns (ITR) nears, this strategy can help you lower your tax payouts. Income made by an investor by selling equity shares is treated as 'Capital Gains' and is taxed as either Long Term Capital Gains (LTCG) or Short Term Capital Gains (STCG).

The STCG is taxed at 15% if the investor sells equity shares within 12 months of purchasing it. STCG applies when shares are sold at a price higher than the purchase price. Meanwhile, LTCG is taxed at 10% on the sale of equity shares over a threshold of Rs 1 lakh after holding it for at least one year.

In both cases, the applicable cess will apply. LTCG also provides the benefit of indexation. “Investors can offset short-term capital losses against short-term and long-term gains, while long-term losses can only be offset against long-term gains.

Any remaining losses can be carried forward for up to 8 assessment years and applied against future capital gains,” Arvinder Singh Nanda, Senior Vice President, Master Capital Services, told ETMarkets. Nanda also recommends investors list all expenditures incurred wholly and exclusively while transferring capital assets such as brokerage and commission and declare them eligible for deduction while filing their Income Tax Return (ITR) to minimise tax liability. Adhil Shetty, chief executive officer at Bankbazaar.com, echoed a similar sentiment as he explained the math.