The financial market has seen a major shift in recent years. It used to be that only experienced traders and financial institutions could handle the complexity of investment. Today, anyone with internet access can quickly and easily increase their financial resources using stocks, mutual funds, debt instruments, etc., depending on their risk tolerance.
Mutual funds offer the highest returns with the lowest risk of all the possibilities. However, remember that investment profits are subject to taxation. The Capital Gains from your mutual funds are part of your Income Tax Return (ITR) in India. This post will discuss tax-saving strategies that can significantly reduce your capital gains tax.
Capital gains are the difference between the initial investment and the return received. Capital gains are of 2 kinds- short-term capital gains and long-term capital gains. There is a tax-saving hack for long-term gains.
Tax-saving Mutual Fund Technique
You are granted a 1,00,000 exemption per fiscal year. The simple idea behind this tax-saving tip for mutual fund investments is to split the amount you save over two financial years rather than securing it all at once. You took advantage of the one lakh exemption twice by spreading your redemption across two fiscal years, which reduced your overall tax bill. This tax-saving scheme will be even more profitable by restricting the withdrawn capital income under the exempted limit for every financial year.
Today, we all understand how to invest money effectively to maximize returns. The next step in our investment journey is to protect our money by learning how to use tax-saving strategies to benefit from the advantages granted to us by the tax code. The more tax-saving strategies we are aware of, the more money we may accumulate to secure our futures and lay a strong financial foundation for the coming generation.
So keep browsing the extensive knowledge base with us at AMG Invest for more tax-saving tips, and contact us if you have an investment-related inquiry.