Pay less tax with your investments

Income tax is a complex subject. Our goal here is to familiarise you with the taxation aspects of only that income (or losses) that you may have from your investments, and the ways and means available to use your investments to reduce the amount of tax you have to pay. There are various tax saving investments available at your disposal. We recommend that you consult your tax advisor for details on the tax laws that might be needed to actually file your returns. Paying taxes on investments Of the various types of investments discussed here, mutual funds and stocks are capital assets, and gains from the purchase and sale of these are called capital gains. If you lose money on them, then these are capital losses. Capital gains or losses occur only when you actually sell an investment. Dividends paid by funds or shares are dividend income, while interest earned from bank, post office or other such deposits is called interest income. Here's an overview of the taxation situation for each of these: Tax on mutual funds Non-equity funds are treated as long-term capital assets if held for more than three years. Long-term capital gains tax is payable at 20 per cent with indexation benefit on the realised gains. Gai

This article was originally published on March 05, 2021.