tips to Save tax on mf and stock investment

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Last Comment 2024-03-19

2023-12-26

I am thinking to invest in mutual fund and stocks using my mother account. Is it possible to save tax. Also do I need to file ITR? Or can be ignored..my mother is not earning..i am thinking to use my money

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https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782043

flash007

2023-12-26

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yes, all individual is allowed to be exempt from paying tax, if the earnings are below 7L.

So, if your income is already greater than 7L then you can invest in MF/stock using your mom account and the earning up to 7L will be exempted from the tax.

You can skip filling ITR when you are only investing/buying. If you sell anything then you need to fill ITR. You need to fill out an ITR, if you make any profit on your mom's account.

https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782385

AzharKhan1

2023-12-26

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@Demon_slayer

Thanks bro.. just last question, why not 7L per annum , why just 2.5L? 🤔

Regarding mf, as you know it needs rebalancing periodically, so redemption and again investing in some other fund will be obvious per year, so in that case do I need to mandatory pay stcg tax or that can be avoided also? I prefer equity funds

https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782494

Demon_slayer

2023-12-27

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@AzharKhan1 If you choose new tax regime, it's actually 3lacs. Anything after that and upto 7lacs is a rebate(tax that govt discounts for you).

Rebate is not available for capital gains. Profits from mf, stocks are capital gains. Long term Capital gains are exempt upto 1lac per year or upto basic exemption limit(2.5 to 3lacs).

After 3lacs, you have to pay 10%+cess for ltcg and 15%+cess for stcg.

On rebalancing, ideally mutual funds should not require rebalancing every year. If you have completely lost trust on that fund or want to redeem it for tax or need purpose, then ok.

If not, the way to rebalance is to stop the current sip, keep the money in the fund itself. Then start a sip in the fund you want to rebalance to(for higher returns I assume).

You have to pay stcg if you redeem units less than a year. Like if you redeem Dec month sip, in next year oct, a year would not have been completed. In this case, stcg needs to be paid, if your income is above the exemption limit that is.

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https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782043

flash007

2023-12-26

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yes, all individual is allowed to be exempt from paying tax, if the earnings are below 7L.

So, if your income is already greater than 7L then you can invest in MF/stock using your mom account and the earning up to 7L will be exempted from the tax.

You can skip filling ITR when you are only investing/buying. If you sell anything then you need to fill ITR. You need to fill out an ITR, if you make any profit on your mom's account.

https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782139

AzharKhan1

2023-12-26

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What if I don't file ITR? So far my mother is earning some interest in bank balance but we are not filing any return..i fear if I file once it will become mandatory every year

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https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782100

Demon_slayer

2023-12-26

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Stocks and mutual funds are great, you only have to worry about taxes on redemption or selling. For accumulating returns that need tax planning, you will have to invest for years, assuming you are investing only a few thousand every month.

But you have a GREAT opportunity getting tax-free returns with your mother's situation on fds.

Since your mother doesn't have any other income all the interest on fd will be tax-free. With the sky high interest now, move your fds and even rds to your mother's account and enjoy no risk returns from 7.5 to 9.6%. If your mother is a senior citizen.

https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9782137

AzharKhan1

2023-12-26

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But more mf will give more returns than fd..only thing to worry is the taxation

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https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9786238

john78

2023-12-28

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Understand how Short term and Long term capital gains works for both Equity and Debt funds. If your mother earned Short term gain, your mother have to pay the Income tax regardless of her income. For example, your mother is investing in one of the scheme under Equity category via SIP and withdrawing within a year, she has to pay 15% of the profit. So, learn how we are taxed. More information here: https://cleartax.in/s/different-mutual-funds...ed

You should also read this article: https://news.cleartax.in/optimise-your-taxes-by...

So, if there are Capital gains then it is better to file IT returns. Also note that, the individual will be taxed only when they redeem their fund units.

https://www.desidime.com/discussions/tips-to-save-tax-on-mf-and-stock-investment?page=1#post_9786321

SG_Magical

2023-12-28

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No one mentioned about clubbing of income here. If you transfer funds to your mother's account and invest that amount in equity or fd, then anything earned on that investment would be clubbed to your income only. However anything earned on the returns will not be clubbed. As you are planning to invest in equity/mf only so better to invest it directly on your own account instead of using your mother account.