Invest even after LTCG tax. Here’s why it’s beneficial

When Finance Minister Arun Jaitley announced Long Term Capital Gains (LTCG) Tax in his Budget 2018 speech, it didn’t went down well with investors. Since then, markets are gyrating.

The LTCG tax translates levying a tax on profit generated from assets such as shares, real estate and share-oriented products held for a minimum period of one year from the date of acquisition. The tax regime will be applicable from April 1, 2018.

The investors will have to pay 10% tax on profit exceeding Rs 1 lakh made by selling any asset including shares, mutual funds and other shares-oriented schemes. It is noteworthy that there would be no tax deduction on gains accrued upto January 31, 2018.

This may not encourage people to invest, but that shouldn’t be the case. Through investments, one can build a huge corpus and look forward to a financially stress-free life. Investments can make you realise your short-term and long-term goals.

In this scenario, all you need to do is tweak your investment plan a bit. Here’s how

1. ELSS: The Equity Linked Savings Scheme (ELSS) can generate higher returns, even after being taxed. They are a good option for long-term investments and can generate more wealth than traditional investments. They are flexible and come with tax saving benefits.
2. Debt funds: It’s time to bring debt funds from the dead. Wealth generated from debt funds are eligible for indexation benefit, which can lower down the effective capital gains. Debt funds clubbed with equity funds can be a good option.