Kotak Assured Savings Plan
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Kotak Guaranteed Savings Plan
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Ref. No. KLI/22-23/E-BB/492
Ref. No. KLI/22-23/E-BB/490
The economy of India is still expanding. Therefore, it needs ongoing capital infusions to keep booming. Investors are key drivers of India's economic growth, making the capital gains tax an essential tool for asset purchases and sales.
The word “capital gain” describes the increase in a capital asset’s value upon sale. A capital gain happens, to put it simply, when you sell an asset for more money than you purchased for it. Almost any kind of asset you own is a capital asset, whether it was bought for personal use or as an investment.
Key takeaways
When you sell an asset, you realize capital gains by deducting the purchase price from the sale price. In certain situations, the Internal Revenue Service (IRS) taxes individuals on capital gains.
The capital gains, or profits, are said to have been “realized” when stock shares or any other taxable investment assets are sold. Unsold investments and “unrealized capital gains” are exempt from the tax. No matter how long they are held or how much their value rises, stock shares will not be taxed until they are sold.
Most taxpayers pay a greater rate on their income than any potential long-term capital gains. Thus, they have a financial incentive to hang onto investments for at least a year to benefit from the lower profit tax.
The steps involved in determining long-term capital gains are listed below
To calculate the long-term capital gains tax, complete the aforementioned stages and then deduct any applicable exemptions granted by the following sections.
Follow the steps listed below to calculate their short-term capital gains tax with accuracy:
By utilising provisions under the following parts of the Income Tax Act, you may be able to reduce your capital gains tax obligation if you own an asset.
If the money is then used to purchase another residential property, the capital gains on the sale of the residential real estate are not subject to taxation. However, this is subject to the following conditions being satisfied:
If you sell any other item, such as rare artwork, jewelry, loans of money, or agricultural property within ten kilometres of your city, you may be able to benefit from Section 54F. This provision permits a deduction from the proceeds of the liquidation of any financial instrument to finance the purchase of a residence or other residential property.
Over ₹50 lakh in profits from bonds issued by the Rural Electrification Corporation (REC) or the National Highways Authority of India (NHAI) are exempt from capital gains tax. They have a 5-year term and a fixed interest rate (currently 5.25%). The interest rate on these bonds is taxable. Your investment must have generated a profit from selling real estate and other buildings for it to be eligible for this write-off.
Investors with taxable accounts must comprehend the capital gains tax, how it is computed, and the distinction between long-term and short-term capital gains. Investors will have a greater chance of keeping more of their earnings if they know the various tax rates and structures that apply to capital gains.
Ref. No. KLI/22-23/E-BB/999
Ref. No. KLI/22-23/E-BB/490
