{"id":30757,"date":"2024-06-20T10:24:52","date_gmt":"2024-06-20T04:54:52","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=30757"},"modified":"2024-06-20T10:24:52","modified_gmt":"2024-06-20T04:54:52","slug":"how-to-save-income-tax-on-stcg-and-ltcg","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/how-to-save-income-tax-on-stcg-and-ltcg\/","title":{"rendered":"How To Save Income Tax on STCG and LTCG?"},"content":{"rendered":"

The question is how to save on income tax after earning either Long Term Capital Gains (LTCG) or Short Term Capital Gains (STCG) from your mutual fund investments. The simple answer is Tax Harvesting. Tax harvesting is a strategy that can help your profits on investments to not fall under the purview of income tax liability. Let\u2019s find out what tax harvesting is and how it works.<\/span><\/p>\n

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\"Start<\/a><\/b><\/h4>\n

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What Is Tax Harvesting?<\/b><\/h4>\n

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Tax harvesting is a strategic approach that you can use to minimise LTCG tax on your investments. Long capital term gains are the profits you get when you sell your assets like mutual funds, stock investments, properties and other assets you have held for over 12 months.<\/span><\/p>\n

Tax harvesting involves selling a part of the investment in mutual funds<\/a> or stocks<\/a>, realising the gains, and then reinvesting the proceeds into a similar investment. You can save taxes either by harvesting gains or losses.<\/span><\/p>\n

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Start investing<\/a> in index funds.<\/p><\/blockquote>\n

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How Does Tax Loss Harvesting Work?<\/b><\/h4>\n

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Tax loss harvesting involves selling investments that are currently at a loss to offset gains made from other investments. This will reduce your total income tax liability. If the loss exceeds the gains that you earned the same year, the leftover amount can be carried forward to offset gains in future years. This strategy saves you from paying higher income tax as it reduces the taxable capital gains.<\/span><\/p>\n

Suppose you have long-term capital gains exceeding \u20b91 lakh. You could identify underperforming investments in your portfolio and sell them to book losses and offset gains from other profitable investments up to the \u20b91 lakh exemption limit. You can then immediately reinvest the proceeds into the some other asset. By reinvesting the redeemed amount, you can maintain your portfolio’s growth potential.<\/span><\/p>\n

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