Watch This To Save Lakhs In Taxes By Using Parents

There is nothing certain in this world apart from Death and Taxes.

Now, I’m no shaman who can revive you from death however, I can help you save a bit extra on your taxes if you follow this hack.

You must have heard of tax profit harvesting. If not, no worries. It’s a method through which you can cut down on your long-term capital gains taxes from mutual funds and listed equities.

LTCG on the sale of these investments is 10%. However, gains up to the first INR 1 lakh are exempt, meaning you need only pay tax on the gains over 1 lakh.

So, by redeeming your investments every year and booking gains up to 1 lakh, you can pay little to no tax during your final redemption.

But that’s the case only if your corpus is small. A larger corpus is likely to have capital gains over INR 1 lakh, meaning you couldn’t take full benefit of the tax profit harvesting method.

So here’s the hack: You gift your parents a portion of the corpus. They will invest this amount in their name. This way, you and your parents can maintain smaller portfolios and benefit from tax profit harvesting.

Since your parents fall under the definition of family under the Income Tax Act, gifting money to them does not attract the ire of the income tax department.
.
.
.
.
.
.
.
.
#financewithsharan #tax #taxes #taxseason