1. Get capital gain/loss statements from your PMS provider / MF distributor/ stockbrokers for a period from April 1, 2020, till March 18, 2021. This will give an idea about total capital gains/loss in various names in the family. Calculate short-term (ST) and long-term (LT) gains. For equity MFs/ direct stocks (STT paid) including holdings in PMS for less than 12 months is ST and above 12 months is LT.
While calculating the cost of listed shares and equity MFs, keep Jan 31,2018 grandfathering in mind
For debt MFs including overseas funds / FOF/ Gold /Gold form etc, below 36 months is ST and above 36 months is LT
For international stocks/land & building/unlisted shares etc., below 24 months is ST and above 24 months is LT
2. Also see your past IT returns. Do you have to carry forward ST/ LT losses. In past years gains were either not taxable or when taxable, then taxes have been paid. So focus only on past eligible losses which can be carried forward. Capital losses can be carried forward up to 8 years.
3. Past short losses can be set off against current LT gains. But do not use this. It's better to carry this forward unless this is the last year for carrying forward of losses.
4. LT gains from shares / equity / debt MFs / RE/ gold can be adjusted against:
- long term loss from other shares or equity MFs / Debt MFs/ RE/ gold of current as well as past eligible carrier forward losses.
- short term losses from shares/ equity / debt MFs / RE/ Gold / Fof of current and past eligible carried forward losses. But use this one sparingly.
4. Short-term gains from shares/ Equity / Debt MFs / RE/ Fof / gold etc - against short-term losses of other similar assets of current and eligible carried forward losses.
5. If you have realised ST / LT gains then look for unrealised ST / LT losses in your portfolio. You can convert unrealised ST/LT losses into tax-deductible ST/LT losses either by selling shares and buying back again or in the case of MFs just by switching the options from growth to dividend. You can adjust these as per the above formula.
6. If you have realised ST/ LT losses than either you can carry them forward or can set off these losses by converting unrealised ST/LT gains into realised ST/LT gain either by selling shares or switching plans in the case of MFs.
7. The other method that can be used is to buy cum- bonus shares and selling the original shares post record date and the difference between the original purchase price and ex-bonus price (on actual sale only) will be ST loss which can be used against both ST/ LT gains.
8. Just remember that ST gains can be set off against only ST carried forward losses of past or ST losses of the current year. Else all other ST/ LT losses and gains can be adjusted against one another.
9. Also make it a point to book at least Rs.1 lac LT gain for every taxable entity, every year from direct stocks / Equity MFs (STT paid).
You can get our Best Intraday Stock Tip or Bank Nifty Option tip for tomorrow and start making profit as a daily habit in the Indian stock market.
You
should Trade Less But Trade Accurately & this is Achieved with our Tip.
