When the finance minister introduced long term capital gains tax (LTCG in popular jargon) on equity mutual funds earlier this year, it triggered a few concerns. But, equity mutual funds continue to remain the best option for long term capital growth, even after the new 10% tax. The big wrinkle is that investors face some complex decisions while withdrawing money from their equity mutual funds.
All withdrawals are not equal.
Since all withdrawals now attract tax at different rates, withdrawing is no longer just about tracking investments older than 1 year. Given the number of tax rules and terms like “grand-fathering”, investors may make mistakes – losing a chunk of their gain to taxes.
Therefore, we have been working on a new algorithm – to minimise taxes when you withdraw. This is now available to all our investing members.
How does it work?
All you need to do is specify how much you are withdrawing. Our algorithm will take care of the following:
- look at all your equity mutual fund investments with Scripbox
- figure out which are long term and short term and where do you have a gain and where a loss
- incorporate the “grand fathering” principle associated with long term capital gains
- consider the set offs available to investors under income tax rules
- determine how much to withdraw from which funds to minimise the tax you will have to pay.
Simplifying complex things is our job and this unique feature is another way we help you grow your hard earned money.
It’s also a reminder that investing is much more than just picking a fund to put your money into. As a Scripbox member, you have experienced our focus on growing your investments over time: selecting diligently without bias, reviewing annually, rebalancing with minimum taxes, alerting you about short term taxes while withdrawing and so on.
PS: If you want to see how it works, here’s a step by step explanation of this feature. You don’t need to withdraw money just to “try it out” 🙂