Tax-aware investment planning

Long-term gains on equity funds and shares are tax-free up to ₹1.25 lakh each financial year. The allowance is lost if unused. Selling units with that much gain and reinvesting the same day resets your purchase price higher and saves up to ₹16,250 of future tax a year, with cess. Over ten years that is over ₹1.6 lakh for a single investor, more for a family where each member has their own allowance.

• Short-term losses can be set off against short- or long-term gains; long-term losses only against long-term gains.
• Unused losses carry forward for 8 years, but only if your return is filed on time.
• Booking a loss in a fund you no longer want, in the same year as a gain, cuts that year's tax.

Mutual fund units are redeemed first in, first out. Knowing which lots are past 12 months, or 24 months for unlisted shares, and timing a sale by a few weeks can turn a 20% tax into 12.5%, or zero within the exemption.

• Debt funds bought from 1 April 2023 are taxed at your slab rate; for high earners, choosing between debt funds, bonds and deposits changes after-tax returns.
• Switching from Regular to Direct plans is a sale, so plan it around your gains.
• NRIs: fund houses deduct TDS on redemptions, and a double-tax treaty may let you reclaim or reduce it.
• Gifts to a spouse or minor child can bring the income back into your hands under the clubbing rules; gifts to adult children usually do not.
• Business owners and professionals: how investments sit alongside business income and advance tax.

We plan investments with tax in mind. Filing your income-tax return, tax audits and disputes are separate services; we can work with your CA or introduce one.

1. Your holdings and gainsFrom your Consolidated Account Statement and demat holdings.
2. A tax mapWhich lots are short or long term, gains, losses and the exemption left this year.
3. A planWhat to sell, when and in what order, and what to reinvest in.
4. Every yearBefore 31 March, so the exemption is never wasted.