As the FY 2020-21 is closing, I decided to write a simple thread on how equities are taxed in India and how you can save income tax by following simple logical steps.
Here’s a thread for the same. 🧵👇
Do retweet for better reach and help others save taxes. #taxplanning
Firstly, let us understand the types of capital gains that are taxed in equities. These are,
a.Short term capital gains
b.Long term capital gains (1/n)
If an investor is holding shares listed on a recognized stock exchange (NSE, BSE) for more than 12 months, the gain/loss arising from the sale shall be ‘Long’ term. Else, it shall be ‘Short’ term. (2/n)
Let us now understand the rates of taxes on these gains. (3/n)
Short term gains on the above shall be taxed at 15% u/s 111A if STT (Securities Transaction Tax) is paid. Please note that usually every investor pays STT which is charged at 0.1%, both at the time of buying as well as selling the shares. (4/n)
Long term gains on the above shall be taxed at 10% u/s 112A only on capital gains exceeding Rs. 1 lakh. So, if your long term gains come at Rs. 3 lakh, then you need to pay Rs. 20,000 (10% of Rs. 2 lakh). (5/n)
Now, few more important things to note here before we dig deeper. Resident Individual/ HUF do not need to pay tax if their income is less than Rs. 2.5 lakh. So, if the gains on equities are less than this limit, one need not pay tax (assuming there is no other income). (6/n)
‘Short’ term loss can be adjusted against both short term gains (taxed at 15%) as well as long term gains (taxed at 10%). However, ‘Long’ term loss can be adjusted only against long term gains (taxed at 10%). (7/n)
Let me tell you the little logic behind this provision. In case you are holding the shares for long term, you must make more money. Why? Because you gave more time. (8/n)
But, if you make loss on your long term holdings, the government won’t allow you to set that off against the short term gains. Simple! (9/n)
So, the very first tax saving tip here is to book short term loss on shares. To simplify, sell the short term shares in loss before 31st March. By doing this, you are actually using that loss to set off against your short term gains and hence save tax at 15%. (10/n)
Follow this. Look at your portfolio, there can be few stocks which you bought during the financial year. If it is making loss, sell them and book the loss on paper at least. Doing this will help you set off it against both short term and long term gains. (11/n)
Remember this, if you are convinced that the stock is a great buy even though in loss, you can buy again after a couple of days. But selling once and booking loss is actually helping you save taxes. (12/n)
Also, if you are late in selling, say if you sell the stock in loss after one year, it will become long term loss. So, better to sell them during the FY. A bull market like this is the best time to sell your mistakes as many like @AdityaD_Shah, @aditya_kondawar point out. (13/n)
And as discussed earlier, you cannot set off long term loss against short term gains (taxed at 15%). You will have to set off it against only long term gains (taxed at 10% and that too after the exemption of Rs. 1 lakh). (14/n)
Another obvious tax saving tip from our above discussion is that you must book long term gains on paper every year. Say you have shares that are making you a long term gain of Rs. 1 lakh, you need not pay tax on this as long term gains are exempt to the tune of Rs. 1 lakh. (15/n)
So, it is always prudent to book long term gains every year at least to the tune of Rs. 1 lakh. Remember, this limit of Rs. 1 lakh exemption on long term capital gains is every financial year. (16/n)
I know there are investors like @dmuthuk sir who want to hold the shares for 4-5 years or even a decade or more. That’s a great idea. But you can book profits on paper upto Rs. 1 lakh every year and again buy the stock for another long term period. That’s smart tax saving! (17/n)
And for all these tips you need to do another simple task: File your income tax return in time. The due date for individual and HUF (non audit case) is 31st July and for others it is 31st Oct. (18/n)
Belated return filing would mean non eligibility for carrying forward the short term and long term losses. This is govt's way of rewarding a prompt tax filer. (19/n)
Short and Long term capital loss can be carried forward for 8 assessment years. Again, Long term loss can be carried forward to be used against only long term gains. Whereas, Short term loss can be carried forward to be used against both short and long term gains. (20/n)
Oh, and I almost forgot to add, avoid intraday and trading in derivate market. The losses from these are tagged as ‘Speculation loss’. And this cannot be set offed against the regular short term or long term loss on sale of shares. So, the law makers too demotivate this. (21/n)
So to summarize the thread, 1. Book short term loss before 31st March. 2. Book long term gains to save tax on gains upto Rs. 1 lakh. 3. File the income return on time. 4. Avoid intraday and derivative trading unless you are an expert. (22/n)
A microcap bearing company, with 30% plus EBITDA margins that is doing 4x capex in upcoming two years deserves to be studied.
In this thread I will try to deep dive 'SKP Bearing Industries Limited' to understand the triggers that lie ahead 🧵
First things first, the idea to study this business was generated by @PrathameshHirv3 . So, all due credits to him.
Let us discuss about the promoters. SKP was incorporated in 1991 as a partnership firm and in January 2022, it transformed into a Limited company.
Mr. Shrikand Kamlakar Palshikar and Mrs. Sangita Shrikand Palshikar lead the operations of SKP.
Shrikand sir has an experience of over 34 years. He holds a degree in Master of Technology in Mechanical Engineering with a specialization in Production Engineering from IIT Bombay.
Also, he has completed the Rolling Bearing Theory & Performance Course from SKF College of Engineering. He previously worked with SKF India too.
Last month I deep dived a microcap gem which is into fast moving artificial fashion jewellery and has a legacy of 190 years!
A long thread ahead 🧵
Gargi by PNGS is the new venture promoted by the promoters of PNG and Sons Limited, which has been a go to brand in Maharashtra since 190 years.
Gargi deals in 92.5% certified sterling silver jewellery and brass jewellery, idols and other silverware and related gift items.
‘Purshottam Narayan Gadgil (PNG) Jewellers’ was established in 1832 by Ganesh Gadgil and it operated in two branches, with P. N. Gadgil & Sons in Sangli, and P. N. Gadgil & Company in Pune. These two were separated in the year 2012.
You are bored and you start scrolling endlessly shorts content on Youtube. It is the time you realize how addictive it is!
No wonder Youtube is promoting this left, right and center. How can this be a wonderful opportunity for companies like Tips Industries, let's dive in🧵
Tips Industries get its 50% topline from Youtube. Hence, the growth in the Youtube views is bound to aid company in doing better.
In FY23, its Youtube views stood at whopping 112.7 Bn. This was at just 59.6 Bn in FY22. A solid growth of more than 100%.
However, its revenue did not see the same kind of growth.
Its revenue for FY23 stood at 187cr vs 136cr in FY22. And there are multiple reasons for this!
As we near the March end, I thought of sharing a detailed thread on tax planning in case of equity shares.
I tried to keep things as simple and lucid as they can get.
Keep a popcorn tub ready. Read on and bookmark for further use 🧵🔖👇
RBI hikes repo rate today to 6.5%.
If you are wondering what repo rate is then here's an extensive yet super simple thread to understand the role of @RBI and how it uses 'Repo Rate' and 'Reverse Repo Rate' 👇🧵
Let us first understand the role of the Reserve Bank of India in managing the Indian economy.
There are two major elements of the Indian economy.
🔸The Businesses
🔸The Households
🔸The Businesses:
They are the producers of the goods and services.
Any business would be happy if it is growing and the prices of the goods and services sold are ever rising.
They would be more interested in ‘Economic growth’.
Huge shout out to the entire twitter community for saving a life.
I raised approximately 13 lakh last year in August for my sister in law as she had to undergo a liver transplant.
On 4th February 2023 her surgery was successfully done at KIMS, Hyderabad❤️
I'm attaching the receipt here for reference. The funds raised have been successfully applied 🙏
Last year was extremely difficult for us as we had a liver donor from our family but it did not match the patient.
I was feeling guilty of raising funds so quickly as the surgery kept postponing.