Legal tax planning is always permissible. You can take advantage of number of laws to ensure lower tax outflow. We shall list down couple of tax liability saving measures:
- Nowadays most modern brokers give you tax PnL on real time basis. So for the current year FY 24–25 , set a reminder to check in March 2025 i..e the last month of the FY your tax position for the year so far. For example, if it shows that upto March 24 , you have made short term capital gains of Rs. 2.5 lakhs, and you can see some shares which, if sold, would result in short term capital losses; then sell them. Suppose it results in losses of Rs. 1 lakhs, now your short term capital gains for the year would be 1.5 lakhs ( 2.5 -1), you can always buy back the shares sold next day. In 90% cases, difference will not be more than 1.5–2%. (unless you are really unlucky and the shares shot up by 10% after you sold -which does not happen usually). See, here you lost maybe 2% but you saved almost 15% capital gains. Further, there are chances that price may even go down and you may actually repurchase at lower rate.
- Take advantage of the Long Term exemption of Rs. 1 lakhs each year. Suppose you brought certain shares at Rs. 50000 and now price is Rs. 2.5 lakhs, if you sell all the shares in 1 year during your need, you will be taxed for entire amount, better to sell part shares each year (even if not required) such that total long term capital gains is around 80000–90000 in one year. You can buy back the shares within couple of days , if you want. This way, you realise gains and now your purchase price is the higher one which will help you again when you shall sell the shares next time around. In above example, if A bought shares for Rs. 50000 in 2021 and sold in 2023 , he will pay capital gains on entire 2 lakhs. But if he sold in 2022, he will pay have Long Term Gains which will be exempt from year to year.