Adding to the debate, capital gains here comes after many layers of uncertainty. Think about equity investors who have to sell due to bad governace, fraud etc. In case of gold, real estate and FD the destiny is in your hands to a large extent as one can prolong holding to arrive at a respectable return. One has to sell and get taxed immediately if the fund manager underperforms or the board of company doesn’t do its job. Has the govt. done something to improve the governance framework and contract enforcement? We are not living in the ideal world where the guilty gets punished. We are conditioned to adjust rather than demand strict enforcement of law and order in letter and spirit.
Anyways, what ever happened has happened…
The only way to maximize ltcg now is to open low cost demat in each of your family member’s name… say 5, so u get a total 5 lacs of ltcgt exemption…!!
Otherwise nothing changes,
A lot of people must be thinking, “hey so there is not much diff between shortnor long term now, so i will start trading,
If the prices go up, i will sell and re enter lower”
This is completely out of sense…
All those erstwhile investors thinking this , i request them not to think in such a myopic way…
Rather take small capital say 10,000 and use it and PRACTICE THIS TYPE OF POSITIONAL TRADING first and then decide…
This idea is not only very very stress full, it is so much more hectic if you start doing this with a scrip which u researched and then invested…
Preach Charlie Munger, Warren Buffet, Ramdeo Agarwal, Nilesh Shah and not trading…
The difference between a trader and investor was not just tax,
Do not forget that…
I rest my case in this forum…
It was a pleasure to interact here…
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Charged up environment 
Brings back the dictum of politician and their influences even on an online forum. Politician will do everything that fetches them votes. Positive expectancy with higher votes.
Let us do what is suitable for us, all forms of investing and trading works subject to one knows what works for himself/herself.
Let us preach everything, people should know what works for them. Automatically they will lean towards BEST FIT method. That would be a greater victory for all energetic participants in this vibrant forum. At the end of day you will guide souls to their right destination, of course it brings happiness both to giver and receiver both.
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best strategy is to keep two parts of portfiolio - one core hodling for 3-5 yrs and let cumpounding work for you. Another on whcih you book profits and swtich your horses more frequently and won’t mind paying taxes. I anticipate lots of volatility ahead.
@sumi00 hi
You are not taking into factor the amount of stress that will be incurred by trading positions…
That kind of a situations are not suited for professional people who are already in a lot of stress, and making small profits out of that is not worth the degradation of quality of life…
Also take into the consideration , the loss one may incur due to faulty decisions and volatility…
Investing witha buy and forget attitude is the best and tried and tested way for sustainable returns…
Also in good companies , there will definitely be growth in eps, if not necessary valuation, that itself will generate returns…
What i have seen in life, attempting a new strategy against the old wisdom does not pay enough but take as lot of price…
Investing as we all know is not a function of the price which is the tip of ice berg, rather the fundamentals…
Let the company work for you,
Not the market…
Coz, what the market gives, it takes away too…
The lessons i incurred from my idol investor dd sharma, such as,
Cash flow from different sources if balance out debt and leave enough free cash flow for dividends and capex from internal accruals amd slash down finance cost eg gnfc
Receivables to balance out debt and multiply eps by reducing finance cost eg hcc
Capital restructing of companies with loss making subsidiary to increase consolidated Bottomline eg jindal saw
Niche play with recent development which newly opens route to future contracts eg bls international
Gov strategies to incur future torrent of new orders eg tata power
Foreign companies entering in india by acquisition, and addition of extra bottomline to consolidated financials eg kridhan infra
Just to name a few basic value finding principles, all connecting fundamental changes to financials.
No change in tax structure can affect a mind with digs the iceberg…
And the results from this is multibaggers…
Finding a 3x bagger is not still difficult, find 2 such and compound, a potential 9x returns…
Will positional trading ever match this kind of returns,? NEVER!
All the later can give is a hell lot of stress, a little bit of money and investing already limited time in making decisions which can get colored by emotions…
Rather imvesting time to find a multibagger from this small and midcap universe is more worth it, rather than changing strategy due to tax restructuring…
The only time i can ever think of timing the market is when investing in cyclical stocks like sugar or metals or cement , where timing is crucial in differentiating a 10x position from a 2x position from the same scrip…
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I have tried to work out the impact of LTCG in the excel sheet attached. Have put up a question at the end of the workings. I will remember the question every time LTCG tax creeps up in my mind before giving the buy order.
Please check the workings and would be glad to correct for errors, if any.
regards
NLTCG - Stocks.xlsx (16.1 KB)
Narendra arora
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While reading your post I was thinking of giving a reply but after reading this I decided there’s no point getting into a slugfest with you. Good luck!
I can’t imagine that none of the contributors in this thread, silent readers (looking at the number of hits in URLs, this must be good too), that none of you have encountered what I have asked here. Hoping that someone will answer, and hence bumping it…thx
Even the issue with writing in capital letters could be ignored as a few are ignorant of what it means but this constant demeaning of a profession is unpalatable!
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The Taxation in this budget is decided based on what will fill the coffers to the maximum,not what is good for investors wealth creation. There was no further scope in Indirect Tax collections(the volume is propotional to the Industry output -Product and Services) because the Government has a bleak outlook on the economy, however confident and rheotic they may be in public. As investors we cannot do anything about the LTCG other than voting against the Government in the election. The biggest worry is that the Government is in this kind of a situation while the Global economy is buoyant, wonder what will happen if the Global economy tumbles? The UPA Government removed the LTCG tax based on the recommendation by Kelkar committee and held on to it even during 2008 when the Global economy was in recession. How much ever we may ridicule ‘Harvard and Oxford’ economists in the UPA Government, they made sure that the Indian economy was relatively unharmed during the Global recession and the $100 per barrel Oil prices. I am surprised with most people saying that they have to choose between Devil and Deep sea. I think on the economic front it is very unfair evaluation of the two UPA Governments compared to the Modi Government. The past 4 years have been aggregation of grand economic missteps and then labelling it as good looking words like ’ Structural reforms’ with the media univocally singing the same song. Farmers and the Business men were facing severe hardships and the Government policies (or lack of them) doesn’t give any confidence. Only the retail investors had a ‘feeling’ of economic growth due to the near period gains got from the Bull run of the equity markets. Now with corrections, the reality will dawn on them, The equity and Bodnn market crash late Friday in US indicates that there is a potential for continued downside in the equity markets (and not an one time healthy correction as predicted by many). All these aside, the investment philosophy and strategy should not change immediately due to the LTCG tax as what ever one may do thinking they will mitigate this will actually be worser than not doing any action at all related to this.In my personal opinion, the next Government, if it is going to be UPA, is going to do away with LTCG tax. I wish however the next government is a coalition government with Congress not having full majority. This will ensure that there are partners in the Government who will question/put pressure on bad economic decisions unlike now.
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Why i am so much irritated with not giving indexation is, we are paying taxation on inflation…
If 1 have bought a stock in 2011-12, CII data is 785, and sold it in 2016-17, it is 1125…
Now if i bought it at 100 and sold it at 300, my capital gain is 200 per share…
On 10%, i will have to pay 20 as ltcgt…
BUT, with inflation, what costed me 100, 5 years back, now costs 148 ((1125÷785)x 100) !! But what i have now is just 300 at sell…
So with indexation my ltcg will be 300-148(instead of 100)=152
And my ltcgt will be 15 per share with indexation instead of 20…
Now, if i bought 1000 shares at 100 and sold at 300 …
Without indexation, my tax is 20,000
With indexation , 15,000…
(Not considering 1 lac exemption for simplicity sake )
This is why allowing indexation is so important for long term investments…
Plus one must remember, we are not only paying 5000 from the above example as extra tax just by not letting indexation allowed, this 5000 is actually the “tax on the inflation”…
So its like getting taxed up and down…
This is disgusting…do take note this applies to mutual funds as well, imagine the amount gets invested in real life, this was just an example with 1 lac investment… A lot of middle class people even even 10lacs in direct equity and even many times higher though mutual funds…
Losing 50,000 on 10lacs is no nonsense a thing…
Some members mentiones what is better 10% alone or 20% with indexation…
I beg to defer,
Getting indexation is a basic right of everyone from small to big investers…
Why will i not consider infation and then again get taxed on inflation…
Take taxes , jts good !!
But why tax on inflation!
Give indexation , and stop injustice…
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Let us stay away from personal references or remarks which can be construed as defamatory. In fact we don’t gain anything by adding them to our conversation. In an open forum admin tasks become cut out to manage ‘de da do’ between intellectual set of people like you and others.
You are right in voicing your opinion about any government policies, perhaps that’s strength of democracy. I am sure there are many sided with you same boat as well. Similarly other’s opinion also express their own apprehension. Everything is right or wrong given a context.
Plus this is not place to lambast government, opposition or any other individual. Better we continue with our ideas and opinions no matter how wrong and right may be. Politicians whether Mr Modi or Mr Gandhi has far more resolve than many of us.
What you think or I think always may not be correct. Let us find our weaknesses from the set of people in this forum which alone will make us successful. This is only possible by respecting each other (here through subtle words), that’s not a difficult act to do.
Saying that a good number of people have a common pain of higher taxation and provoked policies no matter whichever govt is. The point is taken and it should end there.
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This reminds lot of literature around 1929 Great Crash. No single individual or a group can crush a financial behemoth like capital markets. Eventuality were many then:
- William C Durrant (the bull of bulls) was truly convinced he can single handed turned the market. More he pour millions into market more it disappeared.
- Arthur Cutten was dead sure markets can not go down. You just can’t go wrong buying American stocks.
- Charles E Mitchell declared there is nothing wrong with American stock market, neither there will be. He asked people to buy, the best of bull is yet to come.
Unfortunately all of them gone bankrupt and down to their personal belongings. It’s another story the man who believed market is going down and made a killing only to kill himself 11 years later.
Market is supreme, it will make everything to beat you down. Factor more error to investing method, making money while losing is upper tale in stock market.
I like the concept of maximum adversity explained by Brent Penfold:
The market will do what it has to do to disappoint investors. It will throw every possible obstacle in your path. Although investing is relatively simple, it’s not easy. And maximum adversity will do its best to make its as hard as possible, making you doubt your every move.
Maximum adversity is the discipline market imposes on all participants. It is through maximum adversity money transferred from majority (weak hands) to minority (strong hands).
In short he advise to survive acknowledge it, comprehend it, and respect it. Otherwise it will ensure your demise. One should always keep in mind about maximum adversity whether he is doing research, new ideas or execution.
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I think scenario 4 is worng. There is no loss of 50 rupees(You have a profit of 50 rupees). It’s true that you don’t have to pay LTCG.
Loss is calculated based on price of 31 Jan 2018 (as it is higher among acquisition price / price on 31 Jan 2018)
As per below news article long term capital loss would be allowed to set off or carried forward
As per #24. “LTCL can be set-off against any other long-term capital gains.” Does it mean investor can set-off LTCL of debt funds against LTCG of equity funds and vice versa? Sounds unlikely but your view can be helpful.
*MUST READ FOR ALL *
This paper clears all doubts & provide full clarity on tax treatment of
LTCG, including on *bonus shares *& also about how the *LTC Loss *will be
treated wef 1-4-18
Kishor Barhate
FAQ-on-LTCG.pdf (572 KB)
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Thanks a lot for sharing.
I had asked the same question twice and any of the articles posted here does not clarify that. However I checked with my CA and as per him ‘it can be used for set off’ …so far, it has been lying unused in my returns and now is the time to make use of it
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