Saving capital gains tax in India is possible through smart tax planning using legal exemptions and deductions under the Income Tax Act. By investing in options like capital gain bonds, residential property, or eligible mutual funds within prescribed timelines, taxpayers can reduce or even eliminate capital gains tax on the sale of assets.What is Capital Gains Tax?Capital gains are the profits investors make when they sell their assets for a higher price than the price at which they were acquired. They include land, vehicles, jewellery,  shares, and stocks.Capital gains are taxable, and there are two types: short-term and long-term. Short-term capital gains result from the sale of an asset held for up to 24 months (2 years). The criteria is 12 months for listed equity shares, equity-oriented funds and units of UTI.Long-term capital gains result from the sale of assets held for more than the holding period as discussed above.Long-Term Capital Gains TaxThere are certain exemptions available for long-term capital gains. If you carry out specific investments/activities outlined in the Income Tax Act, you can legitimately save on long-term capital gains tax.

Liquid fund taxation in India depends on the date of investment and the holding period. Gains on investments made before 1 April 2023 may qualify as long-term capital gains after 24 months, while investments made on or after this date are taxed as short-term capital gains at slab rates, regardless of holding period.What are Liquid Funds?Liquid funds are a debt mutual fund that prioritizes two things: easy access to your cash and predictable returns. They achieve this by investing in short-term debt instruments, typically maturing within 91 days. These instruments include money market options like treasury bills, commercial paper, and certificates of deposit. The return of a liquid fund depends on the market price of the securities held by the fund. While short-term securities typically experience less fluctuation compared to long-term bonds, liquid funds offer relatively stable returns compared to other debt funds.Tax on Liquid FundsLiquid funds offer high liquidity and the potential for steady returns, making them a popular choice for investors. However, understanding how taxes apply to liquid fund investments can be confusing.

Short-term capital gains or STCG arise when assets are transferred within 24 months (12 months for listed equity shares equity mutual funds). They are taxed at applicable income tax slab rates (20% for listed equity shares and equity mutual funds).Key HighlightsNo indexation benefits are available for STCG.Capital gain exemptions for STCG is limited.Except for NRIs, no TDS implications on short-term capital gains.What is Short-Term Capital Gains(STCG)?Classification of Capital Gains as short-term and long-term depends on the period of holding. Short-Term Capital Gain (STCG) refers to the profit earned from selling capital assets held for a period within 24 months (or 12 months for listed equity shares and equity-oriented mutual funds). Indexation benefits are not available on sort-term capital gains.Short-Term Capital Gains Tax RateThe short-term capital gain tax rate varies depending on the type of asset being sold. The tax rates applicable for different types of assets are as follows:After Budget 2024 UpdateAsset TypeShort-Term Capital Gains TaxationTax RateListed Equity Shares & Equity-Oriented Mutual Funds Listed Equity Shares & Equity-Oriented Mutual Funds Listed Equity Shares & Equity-Oriented Mutual FundsTaxed under Section 111A (if STT is paid)20%      Other Assets (e.g., Real Estate, Land, Unlisted Shares)Other Assets (e.g., Real Estate, Land, Unlisted Shares)Taxed at normal income tax slab rates applicable to the taxpayerSlab ratesBefore Budget 2024 UpdateAsset TypeShort-Term Capital Gains TaxationTax RateListed Equity Shares & Equity-Oriented Mutual Funds Listed Equity Shares & Equity-Oriented Mutual Funds Listed Equity Shares & Equity-Oriented Mutual FundsTaxed under Section 111A (if STT is paid)15%      Other Assets (e.g., Real Estate, Land, Unlisted Shares)Other Assets (e.g., Real Estate, Land, Unlisted Shares)Taxed at normal income tax slab rates applicable to the taxpayerSlab ratesIn simple words, as per Budget 2024, effective from 23 July 2024, short-term capital gains on listed shares in India are taxed at a flat rate of 20%.

Section 54EC of the Income Tax Act allows taxpayers to save long-term capital gains tax by investing the gains from the sale of land or building in specified bonds issued by NHAI or REC within six months. The exemption is capped at ₹50 lakh, subject to a five-year lock-in period.What is Section 54EC?When a taxpayer sells long-term immovable property (land or building or both), they have the option to avail capital gain exemption under Section 54EC by investing in certain bonds.Section 54EC bonds, also known as Capital gain bonds are fixed income instruments which provide capital gains tax exemption under section 54EC to the investors. Eligibility Conditions u/s 54ECTo be eligible for exemption under Section 54EC, the taxpayer must meet the following conditions:The exemption under Section 54EC can be claimed by any taxpayer, including individuals, Hindu Undivided Families (HUFs), companies, LLPs, firms, and others.The asset being sold should be a Long Term Capital Asset, which includes land or building or both. The asset is considered long-term if the taxpayer has held it for a minimum of 24 months prior to the sale.The taxpayer must invest the Capital Gains within 6 months from the date of transfer.The investment should be made in 54EC bonds: National Highways Authority of India (NHAI), Rural Electrification Corporation (REC), Power Finance Corporation Limited (PFC) bonds, Indian Railway Finance Corporation (IRFC) Limited bonds or any other bond notified by the Central Government.The total investment amount cannot exceed INR 50 lakhs during the current financial year and the subsequent financial year.The taxpayer cannot transfer, convert, or use the bonds as collateral for loans or advances for a period of 5 years from the date of acquisition.Bonds Eligible for Exemption Under Section 54EC of the Income Tax ActRural Electrification Corporation Limited or REC bondsNational Highway Authority of India or NHAI bondsPower Finance Corporation Limited or PFC bondsIndian Railway Finance Corporation Limited or IRFC bondsKey Facts to Avail the LTCG Exemption by Investment in Capital Gain BondsTo avail the tax exemption the investment must be made within 6 months of the date of sale of immovable property.Such investment can be redeemed only after 5 years. Before April 2018 the bonds could be redeemed within 3 years.The exemption on investment is allowed only against long term capital gains on sale of immovable property (i.e. sale of land or building or both).The exemption is available up to a maximum amount of Rs.50 lakhHow to Calculate the Tax Exemption by Investment in Tax-Saving Bonds?Example 1: Assuming that an immovable property is sold at Rs.70 lakh after a long term period of 42 months from the date of acquisition.

Taxation on the gains made from selling shares on American stock exchanges differs from the taxation of capital gains made from selling shares listed on Indian stock exchanges. Capital gains or Income from U.S. stocks need to be declared in India only by taxpayers with residential status-Resident and Ordinarily Residents. Tax rates depend on the holding period of the stock.Why Should You Invest In U.S. Stocks?Investment in the U.S. or any other foreign country stocks offers diversity and stability in returns to investors due to geographical diversification. Investing in global companies which are attractive and scalable can offer massive returns over the long term.So if you are an avid investor, you should diversify your investments geographically.Protection Against Devaluation In INRInvestment in U.S.

There are various exemptions available on long term capital gains on sale of land such as section 54F, 54EC and 54B. On satisfaction of conditions prescribed, exemptions can be claimed under the respective sections. However, short term capital gains are not eligible for the aforesaid exemption.Key HighlightsSome of the tax saving options for land sale are:Capital gain exemption under section 54F - investment in a residential property.Capital gain exemption under section 54EC - investment in specified bonds (NHAI, RECH, PFCL, IRFCL).Capital gain exemption under section 54B - investment in urban agricultural land.How to Save Tax on the Sale of Land?Profits arising from the sale of immovable property, such as a plot of land, building, or both, are taxable in the hands of taxpayers under the head "Capital Gain" of the Income Tax Act. It is classified as short term or long term capital gain, depending on the holding period.However, taxpayers can save from long term capital gain tax liability by claiming exemption under sections 54F, 54EC and section 54B of the Income Tax Act. These sections provide capital gain exemption schemes that help taxpayers legally save on tax arising from such transactions. The following are the tax saving strategies to avoid high capital gains taxation on property sales.Claim Transfer Expenses Expenses incurred solely for the purpose of transfer can be claimed as a deduction in calculation of capital gains tax.For example, you can claim deductions on stamp duty charges, brokerage, legal fees etc. as deduction.However, expenses indirectly incurred cannot be claimed as a deduction such as travel and lodging expenses, telephone and courier charges related to sale of property etc.Claim Improvement ExpensesFor the land to be used or re-used in the desirable state, you might have incurred certain expenses namely leveling, water connection, demolition of old structures and clearing the debris, internal connectivity such as roads, electricity connection etc.You can claim those expenses as cost of improvement in calculation of capital gains.If the capital gains are long term in nature, indexation can also be claimed for cost of improvement.Indexation BenefitsIndexation benefits can be availed if the capital gains are long term in nature.For resident individuals, there is still an option to claim indexation benefits on sale of land. Indexation benefit adjusts the purchase cost to the inflation levels at the date of sale, thereby increasing the purchase price and eventually reduce the taxable capital gains.Hold the Asset for a Long TermIf the land is sold within 24 months, it is treated as a short-term capital gains, and taxed under applicable slab rates.On the other hand, it is treated as long term if held for more than 24 months, and taxed at 12.5% without indexation.

Fixed Deposits (FDs) interest income are taxed at regular slab rates. Besides, there are tax deductions available against FD interest income on satisfaction of certain conditions. Section 80TTB allows a maximum deduction of Rs.50,000 for senior citizens who earn interest income from savings account or deposits. This deduction is available only under the old regime.Where can I Check my FD Interest Income?More often than not, bank interests are not considered for income tax calculation and tax planning strategies because of their quantum as compared to other major sources of income.But, it is necessary to consider FD interest for tax implications to avoid underreporting of income and consequent penalties.FD interest can be checked on any of the following. Bank statementsForm 26ASAnnual Information Statement (AIS)Taxpayer Information Statement  (TIS)How to Calculate Income Tax on FD Interest?After considering all these sources, the FD interest is added to the income earned.The interest income earned is shown under the head ‘Income From Other Sources’ in your Income Tax Return.Deduction under section 80TTB can be claimed if the taxpayer is a resident senior citizen under the old regime.Amount of principal deposited under section 80C can be claimed as a deduction under the old regime. Tax is calculated on the respective slab rates of the taxpayer. The tax implications might differ based on the regime he chooses, the age of taxpayer and residential status. TDS, if any deducted from the interest income, is reduced from the overall tax liability.

Taxpayers can pay income tax dues, like self-assessment tax or advance tax online using the e-Pay Tax facility on the income tax portal. All taxpayers can pay directly through net banking, debit card, UPI, or by generating a challan. Once paid, ensure it reflects in Form 26AS and your ITR.Key HighlightsSelf-assessment tax is paid under the minor head ‘Self-Assessment’ (code 300).Payments can be made via net banking, debit/credit card, UPI, RTGS/NEFT, or at a bank counter.Always download the challan (with BSR code & challan number) for ITR filing.How to e-Pay Tax Online?Here's a step-by-step guide on how to pay tax online through the Income Tax Portal:Step 1: Navigating to 'e-Pay Tax' SectionVisit the Income Tax PortalOn the homepage, locate the 'Quick Links' section on the left side. Click on the 'e-Pay Tax' option or use the search bar to find 'e-Pay Tax'.Step 2: Enter PAN/TAN and Mobile NumberEnter your PAN and re-enter to confirm it. Provide your mobile number and click 'Continue'.Enter the 6-digit OTP received on your mobile number and click 'Continue'.Step 3: Select the correct Assessment Year and Payment TypeSelect the first box labelled as ‘Income Tax’ and click ‘Proceed’ From the ‘Assessment Year’ dropdown, select ‘2025-26’Under the ‘Type of Payment’, select ‘Self-Assessment Tax (300)’ and click on 'Continue'.Step 4: Enter Tax Payment DetailsEnter the payment amounts accurately under the relevant categories.You can refer to the pre-filled challan on ClearTax for the necessary amounts.Step 5: Select the Payment MethodSelect the payment method and bank to make the tax payment and press 'Continue'.Payment can be made using internet banking, debit card, credit card, RTGS/NEFT, UPI or you can choose to pay at the bank counter.Step 6: Verify Payment InformationAfter clicking 'Continue', you can preview the challan details.Double-check the payment information for accuracy.Click 'Pay Now' to make the payment or 'Edit' to modify the details.Step 7: Submit the PaymentTick the checkbox to agree to the Terms and Conditions.Click 'Submit To Bank' to proceed with the payment.Step 8: Receive Payment ConfirmationYou will receive a confirmation once your tax payment has been successfully submitted.Note: Remember to download the challan as you will need the BSR code and Challan number to complete the return filing process.Step 9: Declaring Tax Paid DetailsDownload the payment challan from the Income Tax portal.After making the tax payment, update the payment information on ClearTax.Go to the 'Tax Summary' page and click 'Add Paid Tax Details'.Upload the challan or enter the details manually.Once done, your tax payment status will change to 'taxes paid'. Proceed to e-file and e-verify your return on ClearTaxYou may refer to this guide for further steps.Authorised Banks for e-Tax PaymentThe list of banks that can be found on the e-filing portal for e-payment of taxes is as follows:Download Official DocumentList Of Authorized BanksAxis Bank Federal Bank New Bank Kotak Bandhan Bank New Bank HDFC Bank Karnataka Bank New Bank Bank of Baroda ICICI Bank Punjab National Bank Bank of India IDBI Bank Punjab & Sind Bank Bank of MaharashtraIndian Bank RBL Bank New BankCanara Bank Indian Overseas Bank State Bank of India Central Bank of India IndusInd Bank New Bank South Indian bank New BankCity Union Bank New Bank Jammu & Kashmir Bank UCO Bank DCB Bank New Bank Karur Vysya Bank New Bank Union Bank Benefits of e-Tax PaymentThe provision of being able to pay taxes electronically has definitely made paying taxes a lot easier. Some of the benefits of e-Payments are as follows:Saves time and can be done at one’s convenient time, avoiding long queuesTax department records are updated automatically without the taxpayer having to take additional measures to ensure the updating of recordsInstant generation of the receipt of tax paymentVerifying the status of tax payment can be done onlineEligibility for e-Tax PaymentThe following assessees have to mandatorily pay taxes online:All the corporate assessees.All assessees (other than company) to whom the provisions of section 44AB of the Income Tax Act, 1961 are applicable.Self-Assessment TaxYou cannot submit your income tax return to the income tax department unless you have paid tax dues in full.

National Pension Scheme (NPS) India is a long-term investment plan for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) and the Central Government. Investments can be made in NPS Tier-I account  (deduction up to Rs. 2 lakhs available  under section 80CCD) or both NPS Tier-I and Tier-II account. Latest UpdateAccount can be held by individuals up to 85 years of age.On retirement, 100% withdrawal can be made if the corpus balance is up to Rs 8 lakhs.Up to 80% of corpus can be withdrawn for non-government employees (60% for government employee).NPS Withdrawal AmendmentThe NPS withdrawal rules has been amended recently through an official notification by Pension Fund Regulatory Authority of India. NPS account can now be maintained by a person of age up to 85 years. Key changes in withdrawal limits are as follows:For Government EmployeesExit ScenarioBalance at ExitLump Sum AllowedAnnuity RequirementRetirement / DischargeUp to Rs.

As the final deadline of 31st December to file the revised/belated income tax return is fast approaching, the Income Tax Department has recently launched a Compliance-cum-awareness campaign urging Indian taxpayers to declare foreign assets and income in their AY 2025-26 Income Tax Returns. Failure to do so can lead to a hefty penalty of Rs. 10 lakhs and prosecution, depending on the severity of the omission.What are Foreign Assets?If you’re an Indian resident, foreign assets will comprise of bank accounts in other countries, investments in real estate, stocks, mutual funds and other capital assets outside India, financial interest in any foreign entity, or signing authority over any account located abroad, insurance or annuity contract etc.What is the Importance of Disclosing Foreign Assets in ITR? Disclosure of foreign assets and income in income tax returns is important and ensures compliance with Indian tax laws. Here’s a list of reasons which makes it super important:Legal ComplianceAs per the Black Money Act, 2015, it is mandatory to disclose all foreign assets and income within the Income Tax return in the specified schedules, such as Schedule FA for disclosing foreign assets like a bank account, real estate etc. and Schedule FSI for foreign source income to disclose income such as dividends, interest, or capital gains earned from foreign sources. Accurate reporting ensures compliance with the tax laws.Avoiding PenaltiesNon-disclosure of foreign assets and income in income tax returns can lead to a penalty of Rs.