"Maximizing Your Tax Savings: The Art of Balancing Capital Gains and Losses"

As the tax season rolls around, we all want to keep as much money in our pockets as possible. One strategy that often gets overlooked is balancing capital gains with capital losses. By mastering the rules and regulations of this technique, you can effectively optimize your tax liability and keep more of your hard-earned cash.

To start, let's clarify some terms.

Short-term gains are profits made on investments held for less than a year, while long-term gains are made on investments held for more than a year for Equities.

For debt, short-term gains are made on investments held for less than three years, while long-term gains are made on investments held for more than three years.

?Understanding the difference is crucial because the rules for balancing losses and gains depend on the length of time the investments were held.

Throwing the shadow on the rules now

Short-term losses can offset both short-term and long-term gains. So, if you have a short-term loss from one investment, you can use it to balance out any gains from other short or long-term investments.

Unfortunately, losses from over 8 years ago can't be used to offset gains.

Now, let's talk about long-term gains.

Long-term losses can only offset long-term gains.

And, here's a bonus - long-term capital gains up to INR 1,00,000 in both mutual funds and direct stocks are tax-free!

It's worth remembering that losses under the head of capital gains can only be balanced with other capital gains. So, you can't offset a capital loss with, say, a loss from your business or profession.

In a nutshell, balancing capital gains with capital losses is a smart way to save on taxes and keep more money in your pocket. By understanding the rules and regulations, you can master this technique and put more money back into your wallet.

In conclusion, balancing capital gains with capital losses is a valuable tool for maximizing your tax savings and keeping more of your hard-earned money. By taking advantage of this strategy, you can ensure that you're making the most of your financial planning, and taking control of your finances. So, make sure to consider this technique when planning your finances for the current financial year and also in the next financial year.

We at Siddhanam Capital always recommend our clients to take advantage of tax-saving options and make informed decisions for their financial well-being. So, make sure to implement these strategies and save on your taxes today!