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  1. Asked: November 1, 2024

    How is inheritance taxed on property and investments in India?

    Viha K
    Viha K Explainer

    Here’s a simple guide to inheritance tax in India: No Inheritance Tax in India: Currently, India does not have an inheritance tax. This means you won’t pay any tax to the government just for inheriting property or investments. However, there are some taxes to consider in the future: Capital Gains TaRead more

    Here’s a simple guide to inheritance tax in India:

    No Inheritance Tax in India: Currently, India does not have an inheritance tax. This means you won’t pay any tax to the government just for inheriting property or investments.

    However, there are some taxes to consider in the future:

    1. Capital Gains Tax: If you sell inherited property or investments, you may have to pay capital gains tax on any profit from the sale.
    2. Income Tax on Rental Income: If the inherited property earns rental income, you’ll need to pay income tax on that rental income.
    3. Other Taxes: Additional taxes, like stamp duty or property tax, may apply depending on the inherited assets and any transactions you make with them.

    Key Points to Remember:

    • No Inheritance Tax: There’s no tax on simply inheriting assets.
    • Future Taxes May Apply: Be aware of taxes if you sell or earn income from inherited assets.
    • Seek Professional Advice: A tax advisor can give you personalized guidance for managing taxes on your inheritance.

    By knowing these basics, you can better plan for your financial future and make informed choices about your inherited assets.

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  2. Asked: November 1, 2024

    How much tax do I pay on dividends from stocks in India?

    Viha K
    Viha K Explainer

    Here’s a simple guide to understanding dividend taxation in India: No More Dividend Distribution Tax (DDT): Earlier, companies paid a tax (DDT) on the dividends they distributed. Now, this tax has been removed. Tax on Dividend Income: Now, the tax on dividends is paid by the person receiving it. ThiRead more

    Here’s a simple guide to understanding dividend taxation in India:

    1. No More Dividend Distribution Tax (DDT): Earlier, companies paid a tax (DDT) on the dividends they distributed. Now, this tax has been removed.
    2. Tax on Dividend Income: Now, the tax on dividends is paid by the person receiving it. This means your dividend income is added to your total income and taxed according to your regular income tax rate.
    3. Tax Deducted at Source (TDS):
      • TDS Threshold: If you receive more than ₹5,000 in dividends in a financial year from a company, a 10% TDS will be applied.
      • TDS Exemption: If your total income is below the taxable limit, you can claim a full refund of this TDS.

    Key Points:

    • No Fixed Tax Rate for Dividends: Dividends are taxed at your regular income tax rate.
    • TDS Consideration: Remember the ₹5,000 TDS threshold and claim a refund if eligible.

    Consult a Tax Expert: For tailored tax advice, it’s best to speak with a tax professional. They can help you understand your specific tax situation and assist with filing.

    By knowing these basics, you can better plan your investments and manage your taxes.

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  3. Asked: October 25, 2024

    Can I lose money by investing in ETFs?

    Viha K
    Viha K Explainer
    This answer was edited.

    Yes, it's possible to lose money when investing in ETFs, just like with any other type of investment. Here’s why: Market Changes: The value of an ETF goes up or down with the market. If the market falls, your ETF’s value might drop too. Special ETF Risks: Some types of ETFs, like leveraged or inversRead more

    Yes, it’s possible to lose money when investing in ETFs, just like with any other type of investment. Here’s why:

    1. Market Changes: The value of an ETF goes up or down with the market. If the market falls, your ETF’s value might drop too.
    2. Special ETF Risks: Some types of ETFs, like leveraged or inverse ETFs, can be riskier and fluctuate more.
    3. Liquidity Risk: Some ETFs may not be easy to buy or sell quickly, which can make it harder to get out of a position when you want to.

     

    However, ETFs have some benefits that help manage these risks:

    • Diversification: Many ETFs follow broad indexes, spreading your investment across many companies and lowering your overall risk.
    • Lower Costs: ETFs often cost less to manage than traditional mutual funds.
    • Tax Benefits: ETFs can be tax-efficient, especially if you hold them for the long term.

     

    To reduce risk when investing in ETFs:

    1. Research Thoroughly: Understand what the ETF invests in, its fees, and its past performance.
    2. Diversify: Spread your money across different ETFs to limit exposure to any single investment.
    3. Think Long-Term: Consider holding onto your ETFs for the long run to weather market ups and downs.
    4. Seek Advice: Talk to a financial advisor to help choose ETFs that match your goals and comfort with risk.

    By knowing the risks and investing wisely, you can improve your chances of long-term success with ETFs.

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  4. Asked: October 25, 2024

    What are the tax implications of investing in ETFs in India?

    Viha K
    Viha K Explainer

    Understanding ETF Tax Rules in India Exchange-Traded Funds (ETFs) are a popular investment option in India, offering diversification and ease of trading. However, it's essential to understand the tax implications to plan effectively. Capital Gains Tax Short-Term Capital Gains (STCG) If you sell yourRead more

    Understanding ETF Tax Rules in India

    Exchange-Traded Funds (ETFs) are a popular investment option in India, offering diversification and ease of trading. However, it’s essential to understand the tax implications to plan effectively.

    Capital Gains Tax

    1. Short-Term Capital Gains (STCG)
      • If you sell your ETF units within one year of purchase, the profit is treated as a short-term capital gain.
      • This gain is added to your annual income and taxed according to your income tax slab.
    2. Long-Term Capital Gains (LTCG)
      • Selling ETF units after holding them for over a year qualifies as long-term capital gain.
      • For equity ETFs, long-term gains up to ₹1 lakh per year are tax-free. Gains above ₹1 lakh are taxed at 10% (without indexation benefits).

    Key Points to Keep in Mind:

    • No Indexation for Equity ETFs: Indexation adjusts the purchase price for inflation, which can reduce taxable gains, but it’s not available for equity ETFs.
    • Dividend Tax: If an ETF distributes dividends, a Dividend Distribution Tax (DDT) may be applicable and is usually deducted by the fund house.
    • Seek Professional Advice: Tax laws can be complex. For personalized guidance, consult a qualified tax advisor.
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