Indian stock market is experiencing a sharp fall for the last one and a half months. When market falls sharply, everyone, who has invested in the market, gets disturbed. It's not possible not to feel fearful in the crashing market. But you need to remind yourself that *This shall also pass*. It has never happened in the last forty five years of the Indian stock market history that it didn't rebounce. Real money is made when you invest in a falling market. If you are fully invested, please sit tight on your current investment. Your loss is just notional. The profits will come back if you are patient. When things get uncertain, it doesn't make sense to get out of the market.Volatility is an inherent characteristic of the market.

India’s financial landscape is transforming, driven by technological advancements in digital finance. The shift has democratized access to investments, enabling individuals to manage portfolios and make informed decisions through mobile apps and online platforms. While digital investing offers convenience, it also brings challenges, including cybersecurity threats and fraudulent schemes like Ponzi and pump-and-dump scams. Despite these risks, with a clear understanding of financial goals, risk tolerance, and the importance of diversification, *seeking professional financial guidance* remains essential for navigating this evolving landscape.

Selling off equity investments at a loss in order to offset capital gains from other equity investments and lower the tax burden is known as tax-loss harvesting.

Find the Equity Investment Losing Money: Find out stocks and mutual funds that aren't making money right now. To lower your total taxable income from capital gains, these losses can be offset against profits.

Sell the Losing Investments: Sell the identified losing investments before the end of the financial year to realize the losses. These losses will be considered realized losses and can be offset against capital gains.

Offset Gains with Losses: STCL (short-term capital loss) can be used to offset both STCG and LTCG.

Set off Long-Term Losses: LTCL (long-term capital loss) can only be used to offset LTCG.

Carry Forward Losses: Unutilized losses can be carried forward for 8 assessment years and offset against future capital gains, provided they are declared in your income tax return.

Reinvest the Funds (Optional): Depending on your plan, you can reinvest in the same or different stocks after realizing the loss. Though India doesn't have a strict wash-sale law like the US, you should nevertheless exercise caution when it comes to the "wash-sale" rule, which prohibits selling an asset at a loss and then buying it again right away.

When filing income tax return, you'll need to have documentation of every transaction, including the buying and selling of the investments. So, keep track of everything. In your income tax returns (ITR-2 for individuals with capital gains), be sure to include information about both capital gains and losses.

Seek Professional Advice: Harvesting tax losses can be complicated. To make sure that your plan is optimized and that tax regulations are followed, it is advisable to speak with a financial counselor.

                    

Short-term capital losses can be offset against short-term capital gains: For example, if you have a ₹1 lakh short-term capital loss and a ₹1.5 lakh short-term capital gain, you can offset the losses against the gains and only pay taxes on the net gain of ₹50,000 .

Long-term capital losses can be used to offset long-term capital gains: For instance, if you incur a ₹2 lakh long-term capital loss and have a ₹3 lakh long-term capital gain, you can offset the gains by the losses, resulting in a net taxable gain of ₹1 lakh.

If you have both short-term and long-term capital losses and gains, you can offset short-term losses against short-term gains and long-term losses against long-term gains.

If you have unused capital losses from previous years, tax loss harvesting can be employed to offset gains and fully utilise any carried-forward losses.

Tax-loss harvesting can be a useful strategy to manage tax liabilities, but it requires careful planning and attention to market conditions.

None of us enjoys paying taxes. Yet we need to pay tax on our income, GST on things we purchase, and since 2018 on the gains we make from our investments in Equity stocks or Equity Mutual Funds.

HRA  was at 30% for X (population of 50 lakh & above), 20% for Y (5 to 50 lakh) and 10% for Z (below 5 lakh) category of cities but the seventh pay commission has reduced the existing rates to 24% for X, 16% for Y and 8% for Z category of cities.

HRA, unlike basic salary, is not fully taxable. Subject to certain conditions, a part of HRA gets exempted under Section 10 (13A) of the Income-tax Act, 1961.

HOUSE RENT

Who can avail HRA?

The tax benefit is available only to a salaried individual who has the HRA component as part of his salary structure and is staying in a rented accommodation. Self-employed professionals cannot avail the deduction.

 How much is exempted?

The exemption for HRA benefit is the minimum of:

i) Actual HRA received

ii) 50% of salary if living in metro cities, or 40% for non-metro cities; and

iii) Excess of rent paid annually over 10% of annual salary.  For calculation purpose, the salary considered is ‘basic salary’. In case ‘Dearness Allowance (DA)’ (if it forms a part of retirement benefits) and ‘commission received on the basis of sales turnover’ is applicable, they too are added to compute the minimum HRA exemption available.

 Example of HRA calculation:

Let’s say an individual, with a monthly basic salary of Rs 15,000, receives HRA of Rs 7,000 (an arbitrary figure) (Annual-12*7000 =84000) and pays Rs 8,400 (Annual -12*8400=1,00,800) rent for an accommodation in a metro city. The tax rate applicable to the individual is 20 percent of his income (If he is under 20% slab of income tax).To avail HRA benefit, the least of the following amount (yearly) is exempted, rest is taxable:

i) Actual HRA received = Rs 84,000
ii) 50% of salary (metro city) = Rs 90,000 (50% of Rs 1,80,000)
iii) Excess of rent paid annually over 10% of annual salary = Rs 82,800 (Rs 1,00,800 – (10% of Rs 1,80,000)

It shows that of Rs 84,000 actually received as HRA, Rs 82,800 gets tax exemption and only the balance of Rs 1,200 gets added to the employee’s income, on which a tax of Rs 240 ( 20 per cent slab ) gets payable.