The stock market has bumpy ride from couple of months and Mr market is offering Good opportunities to Buy the good companies at reasonable price with margin of safety. The Price movements recently been pretty volatile and many investors have sold off some of their investments to mitigate risk. When one sold his stock on profit he has to pay short term or long term tax on capital gain.
Only thing which an investor control is the Purchasing price, as there is no single proven method which fits to all of your investments and we make mistakes . Although best strategy is to buy and forget till the time you need your money However In order to book the profit during the year will help you to offset the mistakes made by you on choosing the stock. This can be done by selling your underperforming stocks and if still you have strong conviction about the stock then purchase the same in the next financial year. It will lower your tax Burdon
Cost basis = Price paid for stock + Commissions / charges you incurred during the purchase
Profits = Amount you get from sale – Cost basis
If you hold your stock for one year or less, then it will be taxed as short-term capital gains which is approximately 15% if profit s more than 1 lac
If your profit is 110000/- ONLY PROFIT
Than the tax you need to pay is 15% of 10000 i.e 1500 which is huge
One way to offset is
Is your realised profit is more than 1 lack say 140000/-
And you have another stock having notional loss of 40000. You need to sold that on or before 27-March- 2019 as in India settlement is T+2 day 30&31 March are Saturday and Sunday
I want to know that what are the stock that is underperforming in your portfolio so that the fellows VP can get benefited and refrain from the Scrip or take diligent decision to buy stock
I also found out that the following from my CA. I trust his answer but sharing for knowledge and a double verification:
LTCG can be offset with LTCL
STCG can be offset with STCL
LTCG can be offset by STCL also, but NOT the other way around.
Hence, I have been taking a lot of profits recently after the massive run up and also trading, but also now starting to sell some of my LOSS positions even though I believe in them and may buy it back 30 days after selling to avoid any Wash Rule Sale that might be prevalent in India.
10% for LTCG
15% for STCG
Cost Basis Price for LT is Jan 31st,2018 so it a massive advantage for me since I have stocks held more than 1 to 5 years and some even 15 to 20 years from legacy family portfolio.
Is there any excel tool or utility which can be used to compute capital gains? One where we can input the dates & prices and it calculates LTCG & STCG considering indexation benefits and grandfathering?
Capital gains or capital losses are for the entire period of a financial year, so you can sell anytime between April and March of a financial year. And I think you can also carry forward the losses for the next financial years.