Tax Planning

Hi Friends.
First of all I would like all of you to atleast use this fall (in which most of our investments are in loss) to use it purposefully or smartly in our annual return filing.
Suppose we have invested Rs 1,00,000 in the markets and today the value of that investment is Rs 60,000. There is Rs 40,000 Notional Loss in our accounts which has no meaning untill and unless we hold it for one complete year (because then there will be 0% long term capital gain tax) but then there is no guarantee that after 1 year this 60000 will sur pas our investment value of Rs 1 lakh and give us surplus returns of more then 20-30%. That means this 60000 will now have to double in one year in order to give us 20% Net Profit in One Years time. (ie: 60000 has to become 1,20,000) Instead, I would go ahead and book this loss before 31st March 2007. What will happen in this case is that If you already have made some profits as short term gains in this year then the short term gain will be immediately set off by this loss and there wont be any tax liability at your end for whatever little profit u have made in the accounting year 2007-2008 ending 31st March 2008. Suppose u have made a profit of Rs 40000 during the year, then your tax liability is Rs 4000. But if you book the losses in your current investments which is Rs 40000 then the tax liability is NIL. There is nothing to loose in it because if u want to stick to the same stocks, u sell them today, book ur short term losses, and buy them next day again. There is no problem in that as well, also it gives u the chance to reschuffle your portfolio if u want. Atleast we would be able to save some tax liablity in this case. This is purely legal.. nothing wrong about it. Please consult ur tax planner or a CA if anybody has any doubts regarding the same.

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As far as the markets are concerned, i think we might see some lower bottoms being formed due to various factors like inflation, global cues, political reasons and dismal industrial production and quaterly results from India Inc. We have to be very selective in stock picking. As of now L&T is looking very attractive for long term horizon, untill and unless it breaks 2350-2400 there is nothing to worry about the stock. We can Buy the stock with a stop @ 2350. Any other queries/feedback or suggestions please mail me at nishantlakkar@gmail.com