Long term capital gains

Since the announcement of long-term capital gain (LTCG) in budget 2018, the equity market has noticed some volatility. The basic reason may not be the imposition of LTCG, but the global volatility which increased in the last fortnight and has contributed to heightened volatility in the Indian market.

This volatility resulted in anxiety among market traders & stock trading tips researchers and they are not sure what to do with their investments that will help them maximize their gains and minimize the tax burden. Although doing investment focus should be on making a profit not on reducing tax. One can reduce the impact of tax but it is not possible to nullify the tax after a certain increase in income.

If you are having large corpus invested in mutual funds, of say more than Rs. 1 crore, then definitely, you might have to pay some tax even if your invested amount is up by 1 percent.

First of all, it is not as bad as being perceived by investors, especially for retail investors. Our back of envelope calculation shows that you are liable to pay tax only if you invest at least Rs. 60,000 every month and you earn on an average yearly return of 12 percent.

Moreover, if you keep on booking profit on your investments even with MCX free tips after every one year (not exceeding Rs. 1 lakh) and rebalance your portfolio to align with your investment objective, we do not see LTCG a burden or dampener in your investment returns.