Share Market Investment Advisory
Share Market Investment Advisory
Investing in the share market can be a powerful tool for building long-term wealth, but it requires informed decision-making and a well-structured strategy. A share market investment advisory provides expert guidance to help investors navigate the complexities of stock trading and portfolio management. These advisors analyze market trends, company fundamentals, and economic indicators to recommend suitable investment opportunities aligned with the investor’s risk profile and financial goals. Whether you are a beginner or an experienced investor, a qualified advisor can help you make data-driven decisions, avoid emotional trading, and manage risk effectively. They provide personalized investment plans, track performance, and offer timely recommendations for buying, holding, or selling shares.
Equity shares and Tax planning
Traditionally, people preferred safer investment options like Fixed Deposits (FDs), Post Office schemes, and bonds. However, with rising inflation and falling interest rates, many are shifting their focus towards equity shares and equity-oriented mutual funds. According to SEBI data, around 1.42 crore new Demat accounts were opened in 2021, reflecting growing interest in the stock market. A significant number of investors in India also favor participating in Initial Public Offerings (IPOs). Investing in equities can help protect against inflation by offering potentially higher returns compared to traditional instruments. However, before entering the market, investors should be aware of the risks and complexities involved in equity investments and plan accordingly.
How to invest in equity shares?
Investors can invest in equity shares through two main routes: unlisted and listed shares.
Unlisted Equity Shares:
These are shares of companies that are not listed on any recognized stock exchange. Since they are traded privately or through over-the-counter (OTC) platforms, Securities Transaction Tax (STT) is not applicable when buying or selling these shares. While they may offer high growth potential, unlisted shares are generally considered riskier and less liquid due to limited market access and transparency.
Listed Equity Shares:
These shares are traded on recognized stock exchanges such as the NSE or BSE. Transactions involving listed equity shares—whether buying or selling—are subject to STT (Securities Transaction Tax), which is collected by the Indian Government at a predetermined rate. Listed shares offer greater liquidity, regulatory oversight, and easier access for retail investors.
Tax benefit in case of investment in shares
Tax Planning Through Multiple Demat Accounts and HUF
To reduce the overall tax liability on capital gains, investors can consider opening separate Demat accounts in the names of all adult family members. This strategy helps distribute capital gains across multiple individuals, thereby maximizing the use of basic exemption limits and minimizing tax on a single person.
- Capital Gains Tax on Equity Shares
Long-Term Capital Gains (LTCG):
If equity shares are held for more than 12 months, gains up to ₹1,00,000 are tax-exempt.
Any LTCG exceeding ₹1,00,000 is taxed at 10%, without indexation.
(Note: Prior to 1st April 2018, LTCG on listed equity shares was fully exempt.) - Short-Term Capital Gains (STCG):
If equity shares are held for less than 12 months, the gains are taxed at a flat rate of 15%. - Capital Losses:
Any long-term capital loss incurred can only be set off against long-term capital gains in the same or future financial years.
Using HUF for Tax Efficiency
Creating a Demat account in the name of a Hindu Undivided Family (HUF) can be a smart tax-saving move.
Under the Income Tax Act, 1961, an HUF is treated as a separate legal entity.
HUFs enjoy their own basic exemption limit and are assessed independently.
- The basic exemption limit for HUFs is ₹2,50,000.
- Dividend Taxation Update
Effective 1st April 2020, dividends received from companies are taxable in the hands of shareholders. - As per Section 194, if the dividend amount exceeds ₹5,000, the company deducts TDS at 10%.
- This TDS can be adjusted against the individual’s tax liability while filing the income tax return.