Tax Harvesting: The income tax department is keeping an eye on the trick of saving tax through Mutual Fund investment. Through Tax Harvesting, investors try to save tax by showing loss. This trick is quite popular these days. But, it can also prove to be costly. Due to this, you can become a victim of Income Tax Notice. Know how you are at risk of tax notice on Mutual Fund Redemption and on receiving the notice, no CA will be able to save you from it.
What is Tax Harvesting?
Tax harvesting means saving tax by using the loss incurred on your invested capital. In this, investors show losses to reduce tax on long-term or short-term capital gains.
Why is the Income Tax Department keeping an eye on tax harvesting?
The Income Tax Department keeps an eye on whether investors are deliberately trying to show losses to save tax. This may be illegal under the rules.
How does Tax Harvesting work?
You can sell your loss making shares or mutual funds and then invest back in the same fund. This compensates for the loss and saves tax.
Which investments are included in this?
Tax harvesting is generally applicable to equity shares, mutual funds, and other capital assets that generate long-term or short-term capital gains.
What mistakes to avoid?
Avoid showing losses repeatedly. Keep a record of your investments. Follow tax rules.
What to do to save tax?
Audit your investments at the end of the year. Plan to reinvest in the same asset even after showing a loss. Consult the right tax consultant.
How to avoid Income Tax Notice?
Follow income tax rules properly and maintain transparency in tax harvesting. Wrongly showing loss can lead to heavy penalty and notice.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at informalnewz@gmail.com
