Tax Harvesting on Mutual Fund Profit | Mutual Fund Taxation in India | STCG and LTCG Tax On SIP

Tax Harvesting on Mutual Fund Profit | Mutual Fund Taxation in India | STCG and LTCG Tax On SIP The financial year is coming to a close. Some of you may be sitting on handsome gains if you’d made equity investments in time, as the markets have gone up around 90% in the past one year. If so, it is important to plan your long-term capital gains in equities as they are no longer tax free. Capital gains earned over and above ₹1.25 lakh on selling equities, including shares and mutual funds, after one year are called long-term capital gains (LTCGs). These LTCGs are taxed at the rate of 12.5% now. We explain how taxpayers can reduce their LTCG liability in case of equities using the various provisions of the income tax law. Tax harvesting: Under this method, the taxpayer can book long-term gains in equities to the extent of ₹1.25 lakh and reinvest the same. The value at which the equities are reinvested is the new cost of acquisition. This process can be repeated every year to take advantage of the ₹1.25 lakh exemption in case of LTCG. Through this, one can save tax of up to ₹10,000 every year. This exemption is available on the aggregate long-term capital gains from equity-oriented mutual funds and stocks. Setting off and carrying forward losses: Another way of reducing your capital gains tax liability is by setting off gains with losses. One should understand the rules first.Short term capital losses are eligible to be set off against both long term capital gains and short term capital gains (STCG), while long term capital losses can only be set off against LTCG Tips to reduce tax outflow Despite these changes, investors can follow some tips to reduce their tax burden: Have a long-term view: In the old and new rules, the LTCG tax rate is lower than the STCG tax rate. This is done to encourage a long-term view to investing. Equity mutual funds are suitable for longer investment horizons. This is because markets can be very unpredictable and can show high volatility in the short term. Over longer horizons and market cycles, however, they have historically stabilized and shown positive growth (past performance may or may not be sustained in the future). A long investment horizon can therefore mitigate the impact of short-term fluctuations on the investment. Redeem only as much as you need: Investors need to pay tax only when they redeem units. Moreover, tax is levied only on the redeemed amount. So, to reduce your tax burden, it is advisable that you redeem only as much as you need. If your finances allow it, you can spread your redemptions over multiple financial years, to further minimize your tax burden. Moreover, capital gains of up to Rs 1.25 lakh are exempt from LTCG tax. Even if the capital gains from redeemed units are higher, you can reduce the tax amount by keeping your gains as close to Rs 1.25 lakh as possible. Chapters: 00:00 - Introduction 00:36 - Overview of Short Term Capital Gain Tax on Equity Mutual Funds Profit 01:43 - Overview of Long Term Capital Gain (LTCG) Tax on Equity Mutual Funds Profit 02:00 - Exemption on Long Term Capital Gain (LTCG) Tax on Equity Mutual Funds Profit 03:23 - Tax Harvesting on Long Term Capital Gain (LTCG) Tax on Equity Mutual Funds Profit 04:21 - How to calculate Long Term Capital Gain (LTCG) on Equity Mutual Funds Profit 05:30 - How to Calculate Profit on Full Redemption and Partial Redemption of Stocks, SIP and Lumpsum in Mutual Fund 07:15 - FIFO Rule on Partial Redemption of Stocks, SIP 08:30 - How to Calculate LTCG and STCG on SIP Redemption 10:05 - SIP Return Calculator 10:50 - SIP Return Calculator with Tax Exemption 11:35 - Setting off and carrying forward losses Topics Covered in the Video: 1. LTCG tax on mutual fund 2. Tax on mutual funds in India 3. Mutual Fund taxes explained, 4. Tax implications of mutual funds, 5. Save Tax on Mutual Fund Profit, 6. Mutual Fund Taxation in India, 7. STCG and LTCG Tax On Mutual Funds, 8. Mutual Fund Taxation 9. Mutual Fund Tax Calculator 11. STCG Tax on mutual funds, 12. Short term capital gain tax in mutual fund, 13. Long term capital gain tax in mutual funds, #Mutualfundtaxationinindia #Investechgurukul #ltcgtaxonmutualfund #MutualfundTaxationinIndia #MutualFundsLTCGandSTCG #TaxesonMutualFunds #HowtosavetaxesonMutualfundprofit #mutualfundtaxesexplained ▒▒▒░░ DISCLAIMER ░░░▒▒ All Video of 'Investech Gurukul' are for education and information purpose only. The videos should not be considered as investment advice or as a recommendation.The user must perform a self-assestment before investing. This is our personal view and mutual funds and equity investments are subject to market risk. Please read all offer documents before investing.