Friday, 26 October 2018

How you can save tax on stock market losses


If you lose money for a stock, you can reduce the damage by deducting the loss of your taxes. Losses are bad, but our tax laws allow us to use them to reduce our tax liability.

Let's talk about capital gains in detail.

Know how we should utilize capital gains to minimize our taxes by understanding rules and regulations of the income tax Act 1961.

Capital gains and loss:

Any gain or loss from the sale of capital assets is called a capital gain or loss. Capital assets will include stocks, real estate, mutual funds, gold, etc.

There are two capital losses, such as

1. Short term Capital gains or losses:

Short term means that the sale of capital assets or shares less than one year from the date of purchase is called "short-term capital gain or loss".

2. Long term capital gains or losses:

long-term means that the sale of capital assets or shares for more than one year from the date of purchase is called long-term capital gain or loss.

For example
an investor has already recorded a short-term profit (selling within 12 months) of rupees. 10,000 in some promotions. At the same time, the investor remains seated on the unrealized loss of rupees. 5000 in other stocks.

In this case, the investor must pay a short-term capital gains tax of 15% for the rupees. 10,000 profits. To reduce short-term capital gains tax liabilities, an investor can sell the shares for which he is billing Rs. 5000 losses. In this case, the investor must pay the tax in rubles. 5,000 (Rs 10,000 - Rs 5,000), not Rs 10,000. To maintain his or her unchanged interest, an investor can then repurchase  the shares.

Before claiming the losses on your shares for tax gains you have to keep some points in mind such as

●     Note down particulars including the Purchase date of shares
●     Sale of shares on FIFO *(First In First Out) basis
●     Income tax filing before due date (before 31 July)

There are many people who make losses and do not bother to claim it  in their Income Tax  Statements. If they do not display them, they will no longer be able to Setoff in against future capital gains.


Save your contract notes with transactions, and you may need to enter transaction information in tax form when you file your tax returns. Calculate your total loss by adding the price of buying and selling shares to the total amount of losses you suffered when you were in position. This is the total amount of your claims that you will use in your tax return.

Contact us at, and we will be happy to solve this problem for you if you encounter difficulties in claiming your own capital losses.

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