Indexation benefit

POSTED BY rajan.panchal24 ON May 28, 2012 12:37 pm COMMENTS (8)

Hi,

I have read the article on jagoinvestor on indexation.

How to Calculate Capital Gains and What is Indexation ?

Can anyone please advice me how to benefit from this? Is there any procedure that needs to be done to benefit from indexation?

Thanks,

8 replies on this article “Indexation benefit”

  1. Renu Chauhan says:

    Thank you Rajan.

    I would just like to add one more thing on what Ashal mentioned –
    The whole concept of letting investor calculate and pay taxes by taking indexation in account is to give him an opportunity to calculate and find out the way through which he tends to pay less tax. Mostly it is better then TDS as it is in the hand of investor to decide whats good for him 🙂

    Thanks
    Renu

  2. rajan.panchal24@gmail.com says:

    Renu, Ur reference post gives info on indexsation but not on how to procced for this benefit. But although post was quite useful. thanks,

  3. rajan.panchal24@gmail.com says:

    Ashal,

    It is so that the investor have to calculated and pay taxes as applicable? Its seems strange to me. And where to pay that tax money??

    1. Dear Rajan, If you are a salaried person, you can declare your STCG or LTCG as the case may be to your employer & on your behalf, your employer ‘ll deduct the due taxes from your salary.

      Alternatively, if you do have netbanking,you may pay your due taxes on such gains from your bank account.

      Thanks

      Ashal

  4. Renu Chauhan says:

    Hi Rajan,

    A thread which might be of interest to you 🙂

    http://localhost/jagoforum2/indexation/3613/

    Regards,

    Renu

  5. rajan.panchal24@gmail.com says:

    Thanks for the reply.

    Say for example I buy a debt fund and keep it for 5 years and later I decide to redeem those uints in that case I would be able to get benefit for indexation. But is there any procedure to be done in prior to get the indexation benefit or at the time of redemption I will get a chance to select between the two- with indexation or without indexation?

    1. Dear Rajan, for your given example, at the time of redemption, the money ‘ll come to you with out any TDS. Now onus lies on you to calculate your LTCGs with or with out indexation & opt which one is more favorable & accordingly pay your taxes. 10.3% W/O indexation or 20.6% with Indexation.

      Thanks

      Ashal

  6. Dear Rajan, the question of getting benefits from Indexation only arise when you do have any LTCGs which are to be taxed & where the indexation may bring down your tax liability.

    For example LTCGs arising out of redemption from Debt MFs, Gold or real estate.

    If you do not have any LTCG, the benefit is not possible.

    Yes you may plan your things to a bit to get the benefit of indexation. For example, you want to redeem your debt fund holdings after 360 days, just wait for 6 days & redeem as LTCG instead of STCG for less than 1Y holding. Here STCgs ‘ll be taxed at your slab rate, where as LTCG ‘ll be taxed @ 20.6% after indexation.

    Thanks

    Ashal

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