Tax-Efficient Investing Basics

Lesson 4 of 5 in Portfolio Construction & Risk · 9 min read

Taxes are a cost, and like all costs they compound.

Holding period matters

In India, gains on equity-oriented funds and on debt-oriented funds are taxed differently, and the holding period determines whether gains are short-term or long-term. Rules change periodically, so always check the latest provisions.

Old vs new regime

Deductions such as Section 80C (ELSS, PPF and others) and 80D (health insurance) are relevant mainly under the old regime. Compare both regimes every year.

Harvesting and timing

Spreading redemptions across financial years and using any available annual exemptions can reduce tax.

Keep records

Maintain capital gains statements from your RTA or platform for accurate filing.

This lesson is educational and not tax advice. Consult a qualified tax professional for your situation.

Key takeaways

• Holding period changes how gains are taxed
• Use eligible deductions under your chosen regime
• Plan redemptions rather than reacting

• Previous: Rebalancing & Behavioural Discipline
• Next: Designing Goal-Based Portfolios