What to do after LTCG?

The stock market has become more volatile since the announcement of long-term capital gains (LTCG) in the 2018 budget. The main reason may not be the introduction of LTCG, but the global volatility that has increased over the last two days and led to an increase in volatility. In the Indian market.

This volatility has caused a great deal of concern among investors, who do not know what to do with investments that will help maximize profits and minimize the tax burden. When investing, the focus should be on making a profit, not a tax cut. The effect of the tax can be reduced, but it is not possible to abolish the tax after a certain increase in income.

At least we believe that there is nothing to worry about for retail investors. The reason for this is the ‘parenting’ clause added to this ad. Until January 31, 2018, all your earnings will be tax-free. After that, all profits up to the amount of Rs. 1 varnish will remain tax free. That is, for 18 finances, only the profit earned between February 1 and March 31 will be taxed.

If you have a large corps invested in mutual funds, it means more than Rs. 1 crore, then you definitely have to pay a little tax, even if the amount you invest increases by 1 percent.

From fiscal year 19, you must pay LTCG for all earnings that exceed Rs. 1 month, if you keep your investment for more than 12 months, you must pay a short-term capital gains tax of 15 percent in any way for a shorter period of ownership.

We believe that the LTCG has a silver coating at this entrance. First of all, it is not as bad as it is accepted by investors, especially retail investors. The back of our envelope calculation shows that you will pay taxes only if you invest at least Rs. You earn 60,000 a month and an average of 12 percent a year. Although 12 percent is a real gain, Rs. 60,000 is a very high amount for a retail investor.

In addition, if you continue to allocate a return on your investment after each year (no more than 1 lp) and rebalance your portfolio to match your investment target, we do not see LTCG as a burden or a reduction in your investment income. Therefore, instead of waiting for a period in which your investment goal or the specific corps you have invested will grow, you should continue to order profit regularly, rebalance your portfolio and reach your financial goal.

Happy investment!