Nearly 73% of taxpayers have already opted for the New Tax Regime, according to the latest available data from a finance ministry press release in August 2024. For most salaried individuals, tax planning—until recently—meant making last minute investments to claim benefits under Section 80C. With the New Tax Regime now the choice of a majority of salaried tax payers, this kind of tax planning is no longer a priority.
Because foreign shares fall outside the listed-securities category, for US-listed shares in India, the holding period for long-term treatment is 24 months, not 12,. The time at which you sell an asset can determine how much tax you pay (see table 1). For example, selling equity within 12 months of purchase results in short-term capital gains that are taxed at 20%. If you sell after 12 months, the gains are treated long-term and taxed at 12.5%. That’s a saving of 7.5 percentage points or ₹ 7,500 on a ₹ 1 lakh capital gain. Gains on these assets are treated as short-term if the asset is sold within 24 months of purchase and are taxed at the applicable income tax slab rate. Gains from assets held for more than 24 months are treated as long-term and taxed at 12.5%. Tax head, 1 Finance, “Some of our clients get a salary from outside India and even invest in overseas equity, according to CA Parag Jain.
Instead, with fewer tax payers looking at maximising tax savings under their income tax, it might be time to look at tax saving more comprehensively. Additionally, as more individuals invest in market-linked assets, tax efficiency in capital gains is becoming increasingly important. Understanding available exemptions, knowing the rules for short and long-term capital gains, and reinvesting smartly when selling a house property are some of the ways investors can improve tax efficiency—provided they understand the applicable provisions. All capital gains are not taxed in the same way. The relevant period is different for unlisted equity, debt assets, property and gold. Capital gains tax calculations can become more complicated if you also invest directly in overseas assets. This is where our tax computation on their overall income often varies from expectations. Tax harvesting is a strategy to manage capital gains tax by selling securities strategically. It has two components. The first is to sell investments that are currently at a loss, realise those losses and offset them against capital gains from profitable investments. This can reduce your overall tax liability.
