How to Reduce Impact of Modi LTCG Tax

Modi LTCG Tax has been introduced, and no doubt Modi has given a serious jolt to investers most probably his Departing Gift . If you think it is only 10%, you are mistaken, it will be more than 10%(it is 10% every time) if you churn your stocks too much even after one year holding as it will be having multiplier affect,as you will pay 10% every time you book profit. Although I am not an expert, but still would like to share some of thoughts which I would like to implement on my portfolio 1 Try to remain invested in long term Solid Secular Growth stories like HDFC Bank etc so that you need not to churn much and no LTCG, this way you keep Keep Modi LTCG Tax away, wait Modi to fade away in History most probably in 2019.2 Every year plan your LTCG so that you churn in a manner that it is one Lakh, you reinvest that amount again in stocks but will save 10000 per year. 3 Invest in mutual funds for long term(specialy in small and mid cap, where more churning happens) , as mutual funds will keep on churning portfolio on your behalf but will not be taxed on their trades and you will be taxed LTCG only when you sell your mutual funds. So your LTCG will be restricted to just 10%.Even if you invest in only mutual funds, sell mutual fund units to create atleast one Lakh LTCG every year, and reinvest, you will save 10000 in this way if you don't have other LTCG. 4 If you have ELSS, when you will sell you will be taxed at 10%.So stay invested if you don't need money and sell in a way that your LTCG don't increase more than 1 lakh. I would like every invester to defeat purpose of Modi LTCG tax legally by investing in way that they need not Churn unnecessarily and to book LTCG of 1 Lakh every year tax free and reinvest that amount even if it is next day .5 Insurance ULIP plan may not be taxed in my view being an insurance product, Please check for its accuracy as I am not an expert. I am not an expert, these views are only for discussion on this form and must be checked for accuracy and I shall not be responsible for any inaccuracy. No buying or selling recommended as usual.

 

One relevent query which I am not able to understand is WHEN A SHORT TERM INVESTOR CAN PAY STT +15% TAX ,WHY DOES A LONG TERM INVESTOR FIND IT HUGELY DIFFICULT TO PAY STT+10% TAX?

 

@kharb , Sir despite knowing tax liabilities most of the investors, all over the world, temperamentally are of, short term,thus giving an edge to long term investors.I am of the view that after effect of LTCG is being exaggerated and after some time business will be usual. Although I foresee some modification in LTCG in near future.

 

You know that will bring in lots in STCG and STT right?

Really? How does that even make sense? Right now you cancinvest with your parents DP and get LTCG upto 3L, 30 L per year for middle class person? Doesnt sound middle class any more.

I believe indexation should solve the problem, and I think indexation will make its way in. I request you to keep calm and move on rather than point your sword at Modi for every damn thing. I am no supporter of politics or parties, but this is a stock forum and lets keep it that way.

G1