How to Smartly Save Taxes on Stock Market Gains? | CA Rachana Ranade

[Music] okay [Music] hey folks see ya rachina randare here and i welcome you all to a very interesting video about how to smartly save taxes on stock market gains if you remember i had done one more video on taxation recently somewhere around 26 jan in which i had said teen guru lagan dinner parega and in that i have talked about what is the meaning of taxes what are the different types of taxes we talked about even constitution of india in that video so if you want to watch that video you can check out the i button but not right now after the video is over what are we focus uh what is going to be our focus in this video is going to be about taxation on five different types of gains which different types of gains it could be a short-term capital gain it could be a long-term capital gain it could be again because of dividend it could be gain because of intra day transaction inequity it could be about gain in f and o segment that is the future as an option segment what happened you want intraday taxation first change the sequence f and o so with this as a basic stuff you know what is going to be covered in the video but if you were to understand all these five taxation aspects very clearly you need to know about five more things taxation depends on what number one it depends on the time period number two it depends on are there any deductions available or not okay this will decide what will be the final final rate of tax which will be applicable on the game number four it's not got anything to do with the tax session but super super important what don't forget to hit that like button and share this video with a lot of friends so that all get educated and they get more and more awareness on the subject of taxation on stock market gains and last but not the least this time i would like to really really really thank these people and of course everyone is special but i'm trying my level best to you know give a small shout out from my end to at least two two people in each and every video now onwards because otherwise i don't have the pleasure to interact with you personally but then i thought i can at least give a shout out to two people in every single video this time the first shout out goes to mr sagar and sagar has just congratulated me for the you know whatever women's day celebration and me featuring in the front page of almost all the newspapers so thank you sagar for uh this amazing comment and how can i forget mr ratnav natarajan and he has been super kind he comments on each and every video of mine and he always says this that i'm sharing your video with all of my friends so thanks a lot to all the viewers and this time special shout out to these two guys now let's try and understand the taxation of all the khatron ke khiladi means those people who love doing intraday trading we are talking about intraday trading in the cash segment or the equity segment we are not talking about intraday in fndo segment right now we are going to cover that okay so what happens in cash segment in the intraday let's understand the meaning first you buy today and you sell today itself or you sell today and then you buy today what is the difference buying first selling later or selling first and buying letter what is the second concept second concept is nothing but concept of short selling if you want you can check out this video later but if you want to learn such amazing concepts like short selling or 75 plus concepts in a very simplified manner and in a very systematic manner then don't forget to check out my basics of stock market version 2.0 and this is the special coupon code for you the expiry of this coupon code is tomorrow so if you want to learn don't forget to check out our website dot com right so one one point that we have understood till now is intraday means what buying and selling on the same day number one number two if it's an intraday transaction it will be treated as a speculative business now we are not here to understand why it is treated as speculative business why not non-speculative business we are going to see a intermediate and ca final taxation we are not here for any professional course taxation right so we just need to understand okay it is treated as speculative business what is the implication of that implication is that taxation will be as per whatever tax lab rate you are in means what assume i'm into the 30 percent tax late in in the 30 tax lab rate okay if i have any intraday profits how much tax will have to be on that 30 percent if he is in 10 percent gain so i'll cutting 10 percent okay he will have to pay how much tax 10 percent tax on his speculative gain on intraday simple right now he is laughing because yesterday only had told me that he has a lot of losses in intraday okay moment oh huh so he has lot of losses in intraday trading now he said what to do can he carry forward this loss yes for how many years for four assessment years okay so if assume in this year he has lost okay and assume zero again nothing nothing next year he has again can he set off next year gains with previous year losses yes but for how many how many assessment years he can carry that forward only up to four assessment years i hope this is also clear what about atc that one like fifty thousand car reduction is that also available if you have some intraday gains answer is again yes well in the media previous section i talked about atc so if i were to get a deduction under section 80 say there could be two possible options possibility number one through investment in i mean something like ppf or a tax saver fd or equity oriented mutual fund whatever possibility number one through investment rule possibility number two through expense route means what you spend on something and you get a deduction but i believe that under atc one of the best things that you can do is spend on insurance in insurance if you ask me i believe that term life insurance is one of the best ones to choose from why because number one it's a very inexpensive solution and number two you'll also get the benefit of saving taxes so if i were to talk about uh you know getting an insurance right now 31st march is very near and in that hurry people might choose a wrong insurance for themselves and regret later but don't worry ditto which is an insurance advisory platform and it is backed by zerudo which was started by fin shots they'll help you in this entire insurance process what number one they'll help you to choose the right insurance policy you can book a free call with them and these guys will help you through whatsapp or text or in fact you can also get on a free call with them when they'll help you to choose the right insurance policy for you number two they'll take you through the entire buying process why because not all people are very tech savvy right so they'll help you in the entire buying of new insurance policy process and number three if required they'll also help you in the claim settlement process as well in fact recently i took my additional new insurance policy i booked a call with ditto and the experience that i got was really amazing and if you want to experience the same thing you can surely check out the link in the description box below now let's go ahead and come to a very interesting point about how futures and options gains are taxed number one most important point that you should note is that it's treated as a normal business income means what do we mean by normal business income like as you have you run a hotel that's a normal business income i run a business that's a normal business income right similarly if you're gaining anything from fndo that will also be treated as what normal business income in short it's not rated as a speculative business income number one number two what about the tax rates how much tax rate is applicable for futures and options gains same logic it's treated as normal tax rates means what if i'm into the 30 tax lab the gains that i get from futures and options will be taxed at 30 percent for him 10 correct so i think this is also very well understood but now comes the very interesting point about set off if i have a separate business like assume i have a hotel business okay but in effendo if i have so much loss okay so i'll give you different different scenarios i have so much loss in effendor i have another business a hotel business in which i have gained okay assume i had an extra house which i sold and on which i've gotten a capital gain this year i have also earned some money on interest let us say interest on fds okay i also have a rental income and of course i have some salary income okay so i have one loss and i have five different income streams incomes or gains right now big question can i start off this huge loss against all these incomes yes or no let's go one by one okay first of all i have this income from hotel business can i set off some part of that loss here yes okay done so whatever gain i had got from that hotel everything is gone okay but still a lot of losses remaining can i set off that loss against the income that i had got by selling my house yes all right so now whatever gain i had got by selling that house that is also gone oh still loss is remaining you can imagine what maddening loss i have made i would have made an effect this is just an example otherwise i'm in profits in effendo okay third thing i'd also want interest income can i set up that balance loss against that whatever okay interest gone but still some losses remaining my god now what else was it fourth one still remaining now one more rental income that i have okay gone but still some losses remaining and that salary is also remaining okay last shall we try why what happened oh it means that the loss on non-speculative business normal business a friend of business in our example cannot be set off against income from salaries in the previous section we have talked about what in the previous section we have talked about speculation gains and speculation loss so what was the rule there speculation loss can be set off only against speculation gain not anything else i hope this point is absolutely clear but there are many many more interesting points like if i'm going back to a friend or taxation okay that is considered as my normal business income correct then what about my expenses on internet charges what about my expenses on the rent of that house of that office can i get that also as a deduction exactly that is what we are going to talk about in the immediate next section of the video now fndo income being treated as normal business income is really really important hi let us understand any normal business to to run any normal business income i am going to incur a lot of expenses okay do i get that as a deduction yes so for example in my business i pay salary do i get a deduction for that yes i pay rent for my office do i get a reduction on that yes now same think of your fndo income as a friend of business income are you maybe going to pay some rent for the office through which you are going to operate that can you get that as a deduction against your referendo games answer is yes you will need a computer you need a mobile phone maybe uh you can get a depreciation on that is that also allowable as a reduction answer is yes why not number three you are going to pay electricity bill is that also a deduction answer is again yes to sharpen your referendum skills you have taken my friend of course is that also an expense which is related to your income earning activity of offender answers again yes so don't forget again to check out my website ratchanalrand.com right so i hope you have understood that because it's a business income you can obviously take all these as your business expenses you can claim them as your business expenses what will happen your ultimate profitability will be your referendum gains minus all these expenses and whatever will be remaining you'll have to pay income tax on that amount wait before that also whatever expenses that you have paid stt brokerage or maybe transaction charges all these these are also available as a deduction simple so balance amount you'll have to pay income tax one more interesting thing not at all encouraged from my side but if you have taken a loan to invest or to trade in effendo horrible decision but if someone has done that whatever interest you're paying on that loan that is also available as a deduction against your gains from effendo okay so i've told you a lot of points what are available as a deduction against your friend again still if some gain is remaining can i still reduce that gain yes how by investing again in atc okay one like 50 000 i told you just in the previous segment right so that is also available now in another situation now if you have incurred a loss in a friend can you carry that forward yes till how many years till eight assessment years i hope with this fndo tax session is absolutely clear but before that one last point whether fndo is an intraday transaction or fndo you are taking a position today squaring it tomorrow or you are taking the position today squaring it after one week or after two weeks or at the end of the month everything whatever is the scenario taxation will be as per normal business income so intraday fndo and uh more than one day eval effendo no separate tax treatment tax treatment remains the same now let's discuss how will your listed equity shares again if i'm talking about short-term capital gain or long-term capital gain how will that be taxed okay so have a look at this table what we have done we have we are talking about different parameters that we are going to discuss we are also going to talk if it's a short-term capital gain then how will it be taxed and if it's a long-term capital gain how will how it will be taxed right before we go go on to the taxation part first one is what is short term what is long term correct so if i'm talking about any listed share i bought it today and if i sell it within one year then it will be termed as a short term and if i buy today and if i sell it after one year it will be termed as what long term so i hope the first point period of holding is absolutely clear so if i make a gain in a short term transaction how much will will be my tax rate that will be 15 but if i get a gain in a long term capital asset i'll be taxed at the rate of 10 okay this one is also clear right now i've gotten again agreed do i get any deductions against that answer is yes which deductions let's understand one by one what about brokerage or other charges which are mentioned in that broker's note contract note do you get that as a deduction answer is yes if you see a deductible deductible in both cases be it short term or weight long term correct what about the benefit of basic exemption limit do i get that and if you see yes is given in both but what is the interpretation of that i'll give you a simple example assume that your total long-term capital gain on listed equity shares is 2 lakh rupees will you have to pay any tax on that answer is no why our basic exemption limit is to like 50 000 correct so no need to pay any tax on that if that 2 lakh rupees had instead of long-term capital gain it would have been a short-term capital gain of 2 lakh would you have been required to pay any taxes no why are it is within a basic exemption limit so no need to pay any taxes simple and clear yes so that was about benefit of basic exemption limit moving on to the next point this is an additional exemption that i'm talking about has got nothing to do with basic exemption limit so again i'll give you an example assume you're a person wherein you are getting a salary and your salary income is 10 lakh rupees simple seller income is 10 lakh rupees now in addition to that we have gotten a long term capital gain of 80 000 rupees okay will you have to pay tax on that 80 000 rupees of long term capital gain answer is no why here for long term capital gain you get an additional exemption of one lakh rupees okay means what one more example you want no problem instead of 80 000 rupees if you would have gained if you if you had a long-term capital gain of one lakh twenty thousand rupees then what will happen tell me from that one lakh twenty thousand rupees one lakh gone why exemption you'll have to pay tax only on twenty thousand rupees at what rate ten percent because it's long term correct long term clear now assume 10 lakh salary and instead of long term capital gain you have a short term capital gain whatever 80 80 000 1 lakh 20 000 or any figure will you have to pay tax on that yes so no additional exemption is available for a short-term capital gain whatever you have that will be taxed at what right 15 we have already discussed about that right now let's talk about set off assume you have a short-term capital loss it can be set up against one short-term capital loss can be set off against short-term capital gain or even long-term capital gain but if you have a short if you have a long-term capital loss long-term capital loss can be set off only and only against long-term capital gain okay moving on how many years can i carry forward my loss if you can see both cases same if you have any short-term capital loss or long-term capital loss you can carry forward for eight assessment years coming on to the last two points what is not available as a deduction if you are talking about security transaction tax that is not available as a deduction and even if i'm talking about section 80c that one lakh fifty thousand that is not available as a deduction for gains from either short-term capital gains as a short-term capital gains or a long-term capital gains i hope that till now whatever knowledge you had about short-term capital gain long-term capital gain taxation you have broadened your perspective on gains from both these now next three to four minutes i want hundred percent attention why in these three four minutes i'm going to tell you a magic formula by which you can gain a lot but by paying zero tax how let me prove my point with the help of an example assume that today you are buying buying boy you are buying shares which has hdfc shares as an example this is not a recommendation so today you are buying hdfc shares worth rupees 10 lakh okay and assume that your target of these 10 lakh rupees invested is rupees 12 lakhs you are wanting to have what 20 percent gains in two years that is your target okay so let's understand what happens after two years because it's our example and because you have to win after two years what happens is that the value is actually rupees 12 lakhs okay are you happy now that one is our chair this is the you're happy very good so after two years what's up what happens is that your value of hdfc shares has gone up to 12 rupees what was your cost tell me cost of buying was 10 lux what is your gain is this an ltcg yes long term capital gain is 2 lakh weight in just the previous section of the video i told you that you will get an exemption of 1 lakh for long term capital gain so you are going to claim that exemption of how much 1 lakh rupees so what will be your balance ltcg so this was not your final ltch i can say this was your base gain okay what is your final long-term capital gain that is rupees one lakh how much tax you are going to pay on that tax rate is what tax rate is ten percent so finally you will be paying ten thousand rupees will say you have just told that you are going to pay zero rupees tax and here you are showing ten thousand rupees tax wait wait wait wait now the concept of profit harvesting comes into place okay how are we going to do profit harvesting for that let's understand so let me keep this i'll not i'll not you know rub this i'll give you case two what was your target tell me target was two lakh rupees gain agreed so assume that after one year so after one year your value of the shares has now become 11 lakh what was the cost at which you bought these shares that was 10 lakh so assume that okay 11 lakh i'm happy so what do you do you sell these shares which were worth rupees 10 lakh so that was your cost price okay now what is your gain tell me gain is one lakh what is the exemption that is available exemption is off again one lakh so how much tax will you pay zero y and again is zero tax will be zero wait you are happy agreed but you are also sad at the same time why you know about my target was 12 lakh nah you're selling entire shares at 11 lakh only is there any solution yes there is a solution now this is this concept of profit harvesting pay attention you sold shares worth rupees 11 lakhs what you have to do sell oops go wait wait wait what do you have to do sell and buy immediate this is the trick sell and buy immediately in simple words what are you doing you're booking profit of 1 lakhs but you're still waiting for that target of total 2 lakhs profit so now what happened what happened still do you have same number of shares in your portfolio yes but what is your new cost price now new cost price is 11 lakhs simple delay if you have not understood rewind and play again now what happens after another year so after one year so ultimately this is now scenario after two years okay so is after one year what has happened what is the value value is 12 lakhs is your target met yes what is your cost price now or 10 lakh no all 10 lakh you sold at 11 lakh and again bought at 11 lakh so your new value is 11 lakh what is your gain gain is one lakh what is the exempt amount one lakh what is the tax zero oh ho now what happened ultimately let us understand ultimately your tax here is zero because you harvested your profit you took the benefit of one lakh each and every year so in the previous case in the previous case what was your gain pay attention what was your gain your gain was two lakh here what is your gain one lakh plus one left oh gain is same case one case two tax ten thousand tax zero zero i hope you have understood the magic of profit harvesting now let's come to a super interesting concept which is the concept of loss harvesting and what is that let's take an example of after a long time chandu and his bandhu okay both both had bought shares of abc limited and xyz limited 100 each okay in abc limited when they are bought hundred shares they both are in a profit of 50 000 but in xyz shares they are in a loss of 30 000 simple delay okay now ideally tell me chandu wandu both would have been required to pay the same amount of tax yes wait but they are paying separate amount of taxes how let's understand first let's take the case of chandu oh by the way they bought both these shares just let us say five months ago so tell me is it a short term or long term it's short term okay now what is chandra doing saying emotional i'm not going to book a loss i'm going to pay 50 000 into 15 percent short term capital gain i'm going to pay a tax of how much 7500 rupees why is he not ready to pay book the loss because he feels that after one year one and a half year i'm surely going to book up book a profit in this so unrealized loss remains just like that maybe after one and a half year he makes a profit agreed okay but bad medicine tell you simple how much has he paid tax again he has paid a tax of 7500 done for this year now let's check what mr bandu is doing bandu on the other hand how much was the gain 50 000 but he says i'm going to book the loss book the loss of how much 30 000 balance 20 000 now he's going to pay a tax of how much 20 000 into 15 percent that is three thousand now we'll say munda because he is booking laws to reduce the tax should that be the logic behind it no he's he's super smart understand the logic behind it what bundle has done he has sold 100 shares of xyz but simultaneously he has bought hundred shares of again same xyz okay so what happened all in all what happened did he book a loss yes agreed but same image at next moment is again what xyz shares so net net number of shares in his portfolio of xyz remains same agreed now has his tax reduced yes now let understand what happens after one one and a half year his target is met now he's into profit okay after one and half a reason profit can he can he book the profit at that time yes because he still has 100 shares in his portfolio now because it's a long term he'll pay only 10 percent tax and that too he'll also get a one lakh exemption i think or catching right so i hope you have understood this concept where you book a loss but immediately buy the shares and this concept is known as the concept of loss harvesting can you see this in any of the portals so if you have a zero the account then you have to go to the console yes click there and there and finally what can you see loss harvesting report exactly so this is the simplest way to understand how much loss i can harvest to reduce my taxes coming on to the taxability of dividend just three important points to be understood number one whatever dividend you are getting that will be taxed at your normal tax liabilities 30 10 percent you know that and that will be taxed under the head income from other sources number one number two if you're an nri then tax rate will be flat 20 okay only for nrs and third important point is that if the dividend income exceeds 5000 rupees then the company who is paying dividend they will deduct tax tds at the rate of 10 percent well i hope you have enjoyed this taxation master class and by now keep your hand on your head i'm sure it might be hot you have learned a lot in this entire video but if you want to learn more on how to file taxes especially five documents that you need to file taxes you can click here and if you want to know more about grandfathering concept you can click here till then take care and bye [Music] you

Channel: CA Rachana Phadke Ranade

Views: 1,651,388

Keywords: CA Rachana Ranade, stock market basics, basics of share market, share market basics, Stock market, money, share market, fundamental analysis, Rachana, CA Rachana, Income Tax Act, Market Gains, Tax on Gains, Stock Market profit, tax harvesting, capital gain tax, tax on intraday, tax on dividend, tax on f&o, how to save taxes, section 80c, ditto, chapter VI A, short term capital gain, long term capital gain, short selling, profit harvesting, loss harvesting

Id: 7aExYsqPUV0

Length: 28min 18sec (1698 seconds)

Published: Sat Mar 12 2022