Market Wrap, Sept 23: Sensex, Nifty50 gain as metal stocks rally, crude oil prices ease

Indian equity markets ended Wednesday on a firm note, with both benchmark indices closing at a two-week high. The BSE Sensex rose 299 points to settle at 74,828, while the NSE Nifty50 climbed 118 points to end at 23,447. Buying interest was broad-based, but metal stocks clearly led the charge as crude oil prices cooled below the $100 mark. Key closing numbers The Sensex gained 299.17 points, or 0.40%, to close at 74,828.25. During the day it had touched an intraday high of nearly 74,974. The Nifty50 advanced 117.80 points, or 0.50%, to finish at 23,446.80. Midcap and smallcap indices also participated, rising around 0.7% and 0.9% respectively, showing that the advance was not limited to large-caps. Market breadth remained positive, with advances outnumbering declines roughly 2:1. India VIX eased further, signalling lower near-term volatility. Metal stocks drive the rally The Nifty Metal index surged over 2.4%, emerging as the strongest sectoral performer. Tata Steel, JSW Steel an...
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No Tax on LTCG and STCG from Equity Mutual Funds and Shares in These 4 Conditions

 

When it comes to investing in equity mutual funds and shares, many investors worry about the burden of taxes on their gains. But what if you could legally avoid paying tax on your long-term capital gains (LTCG) and short-term capital gains (STCG)? According to tax expert CA Dr. Suresh Surana, there are four key conditions under the Income Tax Act, 1961 where these gains are not taxable. Let's dive deep into each situation so you can plan your investments wisely and reduce your tax liability.

1. Total Income Below the Basic Exemption Limit

One of the simplest ways to avoid paying taxes on your capital gains is when your total income falls below the basic exemption limit. This limit is determined based on the tax regime you choose:

  • Under the Old Tax Regime, the basic exemption limit is ₹2.5 lakh.

  • Under the New Tax Regime, effective from FY 2025-26, the limit will be ₹4 lakh.

For example, if your total income — including LTCG, STCG, and other sources like bank interest — remains under the threshold, no tax is payable. Suppose an investor earns ₹1.5 lakh in LTCG, ₹60,000 in STCG, and ₹30,000 from bank interest, making a total of ₹2.4 lakh. Since this is below ₹2.5 lakh, no tax would apply under the old regime.

2. Certain Non-Taxable Transactions

Some transactions are not treated as taxable transfers under the Income Tax Act. These include:

  • Transfer of equity shares as a gift

  • Transfer under an irrevocable trust

If the transfer happens without any consideration, and the transaction involves an individual or a Hindu Undivided Family (HUF), no LTCG or STCG tax liability arises at the time of transfer. This is particularly useful for estate planning or family wealth distribution.

3. LTCG Within Section 112A Exemption Limit

Section 112A of the Income Tax Act provides a major relief for equity investors. Under this section, LTCG from equity shares and equity-oriented mutual funds is exempt up to ₹1.25 lakh in a financial year, provided the Securities Transaction Tax (STT) is paid.

For instance, if you sell shares and realize a long-term gain of ₹1 lakh during the year, you do not have to pay any tax on it. Only the gains exceeding ₹1.25 lakh will attract a 10% tax rate, plus applicable surcharges and cess.

4. LTCG Reinvestment in Residential Property under Section 54F

Another effective way to save tax on your capital gains is by reinvesting the proceeds into a residential house property under Section 54F. However, certain conditions must be met:

  • The entire sale proceeds (not just the gain) should be invested.

  • The new property must be purchased within one year before or two years after the sale, or constructed within three years.

  • You should not own more than one residential property (excluding the new one) at the time of the sale.

If these conditions are satisfied, the entire or proportional amount of LTCG can be exempted. This is a great strategy for those planning to buy a house while minimizing tax outgo.

Key Takeaways

To summarize, investors can legally avoid paying taxes on their capital gains under the following conditions:

  • Total income is below the basic exemption limit.

  • The transaction qualifies as a non-taxable transfer, like a gift or an irrevocable trust.

  • LTCG remains within the ₹1.25 lakh limit under Section 112A.

  • LTCG is reinvested in a residential property under Section 54F.

Always remember, it’s wise to consult a qualified tax advisor to tailor the best strategy based on your personal financial situation.

Conclusion: Smart Planning Can Minimize Your Tax Burden

Understanding the tax laws related to LTCG and STCG is crucial if you want to keep more of your investment returns. Whether your goal is to gift assets to loved ones, reinvest in property, or simply manage your income within exemption limits, being proactive can save you substantial money. Stay updated through credible sources and website or leading financial news outlets, and ensure you make informed investment decisions.

If you want to stay ahead of tax-saving opportunities and financial updates, keep learning and consult tax experts regularly.

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