CA Arun Tiwari
Quick Summary
Introduction In todays world, the promise of high returns often clashes with the reality of taxes, casting a shadow on gains. But fear not! Smart investors have mastered the art of tax management to not only shield their profits but strategically boost them. This guide explores the Tax Management
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FAQ :
The main strategies include complete tax avoidance by understanding tax-free provisions, reducing tax liability by shifting from interest income to capital gains tax, and postponing taxation through investment instruments.
While some previously tax-free investments have changed, the government still allows tax-free amounts up to 2.5 lakhs per year. Savvy investors can strategically allocate funds to maximise these exemptions.
Bank fixed deposit interest is taxed annually. In contrast, debt funds are taxed under capital gains tax, which is only applied when the asset is sold, thus reducing immediate tax liability and offering flexibility.
Instruments like Equity-Linked Savings Schemes (ELSS) and the National Pension Scheme (NPS) allow for tax deductions and deferral of taxes until the asset is sold or withdrawn, enabling investments to grow over time.
While these investments have undergone changes, the government allows tax-free amounts up to 2.5 lakhs per year, which can be strategically utilised by investors.
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