generate-an-image-based-on-the-topic--epf-withdraw.jpg

EPF Withdrawal Rules 2025

generate-an-image-on-the-topic--portfolio-risk--us.jpg

Portfolio Risk: Definition, Types, Formula, & Management

medium_image.webp

small_image.webp

thumbnail_image.webp

image.webp

12 Best Investment Options for Senior Citizens

Typically, investments that generate returns over a holding period of one to three years are classified as long term capital gains.

How to Maximize Your Long-Term Capital Gains in 2023

Home Page

Guides

Investments

"How to Maximize Your Long-Term Capital Gains in 2023"

Pranav Karnad

Investments are easy to crack; Start your wealth journey here

<p>Long term capital gain (LTCG) refers to the profit you make from selling an asset that you've held for more than one year. In India, long term capital gain on equity investments is taxed at a lower rate than short-term capital gains.</p><p>In this blog post, we'll understand what LTCG is, what qualifies as long term capital gain and the tax rates applicable as per the Union Budget 2023. We'll also look at tips to help you maximise your long-term gains.</p><h2><strong>What qualifies as LTCG?&nbsp;</strong></h2><p>Typically, investments that generate returns over a holding period of one to three years are classified as long term capital gain. A debt fund investor, mutual fund investors and other investors must pay LTCG tax on their short term or long term capital gain as per the Income Tax Act.</p><p>Some investments that can generate long term capital gain include the following:</p><ol role="list"><li><strong>Sale of Property </strong>: If a property is sold after being held for at least three years, any money earned from the sale is considered long-term capital gains.</li><li><strong>Sale of Agricultural Land </strong>: Similar to the sale of property, if agricultural land is sold after being held for one to three years, any returns are classified as long-term capital gains.</li><li><strong>Mutual Fund Investments </strong>: If an investor holds mutual fund investments for around one year, any returns from the investment are considered long-term capital gains.</li><li><strong>Stocks </strong>: The returns from investments in stocks and bonds are also classified as long-term capital gains since these investments can be held for extended periods.</li></ol><h2><strong>What are the current tax rates applicable to long-term capital gains?&nbsp;</strong></h2><p>For long-term capital gains tax, if equity shares or units of an equity-oriented fund are sold, a tax rate of 10% is applied on any amount above ₹1 lakh. However, if any other type of investment is sold, a tax rate of 20% is applied.</p><h2><strong>Tips for maximising your long-term capital gains in 2023&nbsp;</strong></h2><p>Here are three tips to maximise long-term capital gains in 2023:</p><h3><strong>Invest in equity-oriented mutual funds&nbsp;</strong></h3><p>Equity oriented funds are known for generating higher returns than other investment options, particularly over the long term. This can be a great way to increase your long-term capital gains, provided you invest wisely and conduct thorough research before making your investment.</p><h3><strong>Hold on to your investments&nbsp;</strong></h3><p>As per current tax regulations, investments held for over three years are considered long-term capital gains and taxed at a lower rate. By holding onto your investments for longer periods of time, you can take advantage of this tax break and maximise your returns.</p><h3><strong>Diversify your portfolio&nbsp;</strong></h3><p>By diversifying your portfolio across different types of assets, you can maximise your long-term capital gains while minimising potential losses. Consider diversifying your investments with listed equity funds, equity mutual funds, US stocks, a good debt mutual fund, etc.</p><p>Overall, by investing wisely, increasing your holding period and diversifying your portfolio, you can maximise your long-term capital gains in 2023.</p><h2><strong>Maximise your capital gains with Fi&nbsp;</strong></h2><p>Fi offers multiple investment options, including Short-term and Long-term. With a simple swipe on your phone's screen, you can invest in <a target="_blank" rel="noopener noreferrer" href="https://fi.money/features/mutual-funds">mutual funds </a>, <a target="_blank" rel="noopener noreferrer" href="https://fi.money/features/us-stock-market-investing">US stock market investing </a>, and more. For a short-term goal, Smart Deposit offers flexibility and interest, while Fixed Deposit provides higher and more stable returns.</p><h2><strong>Frequently Asked Questions&nbsp;</strong></h2><h3><strong>How can I save the LTCG tax on stocks?&nbsp;</strong></h3><p>You can save the LTCG tax on stocks by investing in tax-saving instruments like Equity-Linked Saving Scheme (ELSS), holding stocks for more than a year and investing in equity-oriented mutual funds.</p><h3><strong>I have invested in mutual funds. What is the income tax treatment of mutual funds or stocks?&nbsp;</strong></h3><p>The tax treatment of Mutual Fund investments depends on the type of mutual fund, holding period and the investor's tax slab. Equity funds held for more than a year are subject to LTCG tax, while debt funds held for more than three years are subject to Long-Term Capital Gains (LTCG) tax.</p><h3><strong>Is the LTCG tax deducted automatically from mutual funds or stocks?&nbsp;</strong></h3><p>No, the LTCG tax is not automatically deducted from mutual funds or stocks. It is the investor's responsibility to calculate and pay the tax on their gains.</p><h3><strong>How can I save the long term capital gain tax on an equity mutual fund?&nbsp;</strong></h3><p>You can save long-term capital gains tax on an equity mutual fund by holding the investment for more than a year, investing in tax-saving instruments like ELSS or reinvesting the gains back into the same equity mutual fund.</p><h3><strong>How can I calculate LTCG and STCG (Short Term Capital Gains) from capital gains earned in mutual funds?&nbsp;</strong></h3><p>To calculate LTCG and STCG from capital gains earned in mutual funds, you need to know the cost of acquisition, sale price and holding period of the mutual fund units. For LTCG, the holding period should be more than 12 months, and the tax rate is 10% without indexation benefit or 20% with indexation. For STCG, the holding period is less than 12 months, and the tax rate is the investor's tax slab rate.</p>

How to Maximize Your Long-Term Capital Gains in 2023 | Fi Money

Fi.money