Top Demat Account Hacks to Maximise Profits

Top Demat Account Hacks to Maximise Profits

With the age of technology, shares and securities are no longer in a physical document or certificate form and can be registered and transferred electronically. Dematerialization, also popularly known as demat accounts, has enabled traders to buy and sell shares in an electronic format.

It is a known fact that there are some risks involved in the financial markets. However, there are many traders who open an online demat account. By doing so, they can plan, strategize and invest their money carefully. Moreover, if a trader ends up losing money by selling shares, he/she can monitor the reasons and find ways to offset the losses.

The Need For Demat Account

Securities Transaction Tax (STT) is a tax paid by traders levied on transactions made by them on certain securities in the Indian stock market. This tax is not applicable to currency and commodity trading. The STT for selling securities is different from the STT for purchasing the securities.

Maximum new investors are uninformed of how their losses and profits from share trading are covered in the tax section. They don’t know the tax concessions they are entitled to, and may not be using the tax schemes to their utmost benefit. Not everyone has a dedicated tax advisor or financial expert to guide them. Trusted brokerage firms educate their demat account holders with supervision on tax-benefits as well.

Let’s take a look into how a trader can maximize his profits with the help of a demat account.

Tax Savings On Dividends

Registered organizations provide dividends from their gained profits to every investor, and it's the management committee that determines the percentage of the dividend that is to be presented to the shareholder. If you have a demat account and hold certain shares in that organization, then you will earn the dividend earning periodically.

Moreover, you will also earn a profit when you sell the shares of the organization at a higher price. However, the most important advantage is that you only need to file your taxes for the earnings derived from investing your shares in the demat account. There is no tax levied on the dividend value you gained from the organization. Several traders use this dividend amount as an alternative source of income as well.

Profit From Capital Gain

Imagine selling the shares of an organization at a higher price to another trader, the profit that you earn from it is called capital gain. There are certain methods for saving taxes with capital gains.

Work For Long-Term: Capital gains are taxable if you sell off the shares soon after buying them. These taxable capital gains are called short-term capital gains. If you hold the shares for one year or more, there is no tax applicable on the capital gains that you earn from your shares. Many shareholders utilize this tax concession scheme by the government by storing shares for longer periods in their demat account.

Managing The Short-term Capital Loss: You will incur a short-term capital loss if you hold shares for a short time and sell it at a loss. However, these short-term capital losses can be handled by adjusting it with the taxes that are charged on short-term capital gains. As a demat account holder, you can enjoy tax advantages on short-term capital gains by adjusting it with your capital loss on asset classes that are equity or non-equity based.

Carry Forward The Losses: If you have suffered various short-term capital losses, you can carry forward the loss to be set off on short-term capital gains for up to eight years. The only condition here is that the loss can be adjusted with gain from the same asset class. The advantage is good for a demat account holder who wishes to examine the stock market and save money in the long-term.

Long-term Capital Loss: Even if you wait for a long-term gain to maximize your earnings by holding shares, you may still incur losses. Certain losses that come under the long-term capital loss section can also be controlled. A trader with an online demat account can utilize it to save tax on long-term capital gains.

Back in the day, the transactions at stock markets were run by investors who yelled the buy and sale prices, and the deals were written on paper receipts. After the share market was closed, the documentation would continue to accurately record all the transactions made on that particular day. However, with the introduction of dematerialization, it eliminated such a time-consuming and paper-oriented process. Moreover, by adopting electronic accounting, the traders were more efficient with their investment strategies and it allowed the record to be updated automatically and swiftly.

While taxes may consume a part of your income every year, there are numerous ways you can save tax amounts through tax benefit schemes. Opening a demat account online can help you save taxes and ultimately maximize the profits earned.

Featured 6182159540561959136

Post a Comment

  1. If you do not understand which is the very best home mortgage lending institutions after that you must exposure to home mortgage knowledge since they will certainly recommend you for exclusive private mortgage lenders whitby as they know with a lot of home loan providers. Once again you can see home loan brokers to obtain some great recommendation for your settling your home loan.



Home item

Like Us

Popular Posts