Advantages: If you earn money from the stock market, you have to pay tax, if you want to save, you can adopt profit-booking and loss-setting tricks.

There are only days left to complete the financial year 2021-22. We all know that equity funds have to pay tax on long term capital gains. Therefore, it is also very important to know how to reduce capital gains tax. Today we are going to tell you about 3 ways in which you can save tax on capital gain.

1. Book profit from stocks and equity funds
Long-term capital gains over Rs 1 lakh on stocks and equity oriented funds are now taxable. If you have made a long term capital gain then this is your golden chance to get tax exemption on long term capital gain up to Rs 1 lakh. Book a profit this way before March 31 and take advantage of the tax deduction.

For this you should sell as many stocks and equity funds as possible before March 31, with a profit of up to Rs 1 lakh. Then reinvest this money in the coming financial year.

2. Set-off damage
There are also losses when we invest in the stock market. Set up this loss in the capital gain of the same financial year. I.e. adjust those losses with the profits. Short-term capital losses can be adjusted against short-term and long-term capital gains. However, long term capital loss can only be adjusted with long term capital gain. Any remaining losses can be carried forward for the next 8 years.

3. Capital Gains Exemption Claim
Income tax law allows a taxpayer to claim a waiver on capital gains. Under section 54EC, taxpayers can invest in capital gain bonds to claim a waiver of long-term capital gains from investing in real estate, such as land or a building.

However, these bonds have a lock-in period of 5 years and offer an interest rate of about 5%. Therefore, the investor should evaluate whether the long-term investment with such low returns is suitable for him.