Income Tax Return 2020-21: Do THIS to save tax on Long term capital gains of up to Rs 1 lakh before March 31

Last date to file Income Tax is March 31. Those who have not filed their Income Tax Return (ITR) for AY 2020-21 yet and want to save money in taxes, there is a way where you can still save tax on profit made up to Rs 1 lakh from the stock market. If you have not booked your long-term capital gains yet, March 31 is the last date.

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When you trade in stock market and book small term and long-term capital gains, there is tax involved on the income that you make from the share market. A small term capital gains of 15% flat is charged when you sell shares within one year, while there is 10 per cent tax on long-term capital gains on shares that you sell after one year. However, there is no tax on profit booked up to Rs 1 lakh in a year.  

As per Section 112A, long-term capital gains on equity shares are fully exempt up to Rs 1 lakh and the balance is taxed @10%. In case you haven't booked it yet, you can book long-term capital gains up to one lakh of rupees before March 31 and save money in taxes.  

Also, if you have made these investments from long term perspective, you can sell the shares the same day and buy the same next day or carry out these transactions with different brokers on the same day. The purchase and redemption of the units can be done the same day. This way you can minimise your overall tax liability.