When it comes time to file an income tax return, the biggest tension is to save tax. The same goes for people who get stuck in tax calculations.
Mumbai: When it comes time to file an income tax return, the highest tension is to save tax. The same goes for people who get stuck in tax calculations. When filing ITR, it is often found that the more tax deducted, the higher the liability. That means you have to pay more tax. But there is always confusion about how to save tax. So these three tips will help you save tax.
Keep profits tax free
People who invest in mutual funds or the stock market are always booking long term profits. Most people have a misconception about stocks or mutual funds that the longer they invest, the longer they will make a profit. But people forget that they also have to pay taxes. That’s how a little wisdom matters. Under the current rules, long-term capital gains up to Rs 1 lakh are not taxable for one financial year. Similarly, instead of booking profits all at once for 3-4 years, keep booking small profits every year. So your profit is tax free.
Most investors are aware that short term capital losses are adjusted along with long term capital gains. Long Term Capital Loss can only be adjusted with Long Term Capital Gain. You also make some losses. That will help save taxes.
You need to calculate how much loss you can save on taxes. This means that your tax will be saved and you will not suffer much loss. Through loss booking, you can get out of the weak stocks in your portfolio and take a small loss.
Save tax from bonds
Profits from selling a home are always taken advantage of by investing in another home. However, investing in 54 EC bonds can also be profitable. This is because the returns on these bonds do not incur any TDS. Profits from the sale of a home can be invested in 54 EC bonds from different parts. These are PSU bonds. Cannot be transferred for 5 years. Up to Rs 50 lakh can be invested in this. It is tax deductible.