Should all readers who invest in Mutual Funds be doing Tax Harvesting on Mutual Funds: a food for thought
Tax Harvesting : A way to reduce Long term gain tax on mutual fund gains .
Smart Harvesting : To re invest the "saved amount" back and make ur money work harder .
Long term capital gain tax on mutual fund gains : if u hold a mutual fund for more than 12 months and then u redeem , u will be taxed at the rate of 12.5% on the gains exceeding 1.25 Lakhs , ie, u can avail tax benifit on gain of 1.25 lakhs every year .
Illustration:
Assume u have invested Rs 11 lakhs in mutual fund in 2023 , and , in 2024 value of investment goes to 12.5 lakhs , if u redeem this ur gain will be 1.5 lakhs . 1.25 lakhs gain is tax free . U will be taxed at 15% on .25 lakhs . What if u had sold those units only where the gain is just 1.25 lakhs ?
U don't have to pay any tax .
Now , let's calculate the tax on 1.25 lakhs @ 12.5 %
It's 15625
And if u save this amount every year and start an yearly sip for next 20 years
This amount will swell to Rs 16 lakhs ( calculation based on modest return of 15%)
Execution :
U should redeem mutual funds units every year where u are making a gain of 1.25 lakhs . Redeem today and buy next day
If u are sensitive to market redeem in ur account nd buy in ur wife's account...same day !!
Happy Investment
Happy Learning
