386 A Demat account is a means to store your investment instruments in electronic form. The Demat account is like a bank’s saving account. It allows you to hold your financial instruments in electronic format hence it is taken from the word – Dematerialized. It saves the physical documents from delays, thefts, forgery, etc. Instruments like mutual funds, Exchange-Traded Funds (ETFs) shares, and bonds can be stored in electronic format in a Demat account. Demat is mandatory if you’d like to invest in the stock market as an investor. Table of Contents Dividend BenefitsCapital Gains8 YearsRs. 1,50,000 – Tax Saving Dividend Benefits Since it is mandatory to have a Demat account to purchase shares and be a shareholder; most companies get their dividend payouts deposited directly into shareholders’ accounts. While the company decides the dividend and its intervals; the dividend deposited into the account is tax-free. The transactions like buying and selling of shares attract taxes. The dividend is a source of income for investors. Capital Gains Taxes are incurred on the type of investment made which are broadly classified into Long-term capital gains (LTCG) and Short-term capital gains. Short-Term capital gainsWhen profit is incurred by selling your shares within a year of purchase is termed Short-term capital gains. Short-term capital gains are taxed at 15%. For the investor, the ST capital gains can simply be calculated by: Short Term Capital Gain = Selling Price – Expenses on Sale – The purchase price. Loss: In case of losses for short-term selling; the investor is allowed to adjust the losses against the taxes levied on short-term capital gains. Demat account tax saving benefit is applicable here as the holder can offset their losses against their short-term capital gains for any asset class. Long-term capital gains These gains weren’t taxed until sometime earlier. While this enabled the investor to increase their returns by holding their investments for a longer period of time; it also acted as an incentive. The latest budget, however, introduced 10% taxes for profits exceeding Rs.1 Lakh. If you choose to be a part of the booming economy the capital gains tax is minuscule when compared to the returns one can take. Loss: Long-term capital gains losses can also be offset against long-term capital gains, just like short-term capital losses against short-term capital gains. This is a boon for investors as it can save a considerable amount of tax. 8 Years This is another major benefit of a Demat account vis-à-vis tax saving as the investor who has suffered huge short-term losses via the sale of his share can carry forward the losses for “8” consecutive years. This benefit can only be availed if the loss adjustment is done against the same asset class from which the loss emerged. This type of adjustment can help investors reduce their profit conversely reducing their tax outgo. 8 years carry forward option is best for novices as they are yet to learn the ropes of trading. Rs. 1,50,000 – Tax Saving Under Section 80C of the Income Tax Act, 1961 is the ELSS mutual funds or Equity Linked Savings Scheme. Investors can avail of tax exemption on investments up to Rs. 1,50,000 made in ELSS mutual fund schemes. These are open-ended equity mutual fund schemes offered by most leading fund houses for the tax benefit they offer through the Demat account. ELSS schemes are popular due to their short lock-in period of only 3 years with the growth and dividend option. ELSS scheme offers the double benefits of tax saving with great returns. To conclude, the Demat account is a great all-around tool. You can be a part of the world’s most exciting economy with many benefits like saving taxes and great returns which can help you secure your future. Demat AccountSave TaxSave Tax Using Demat Account 0 comment 0 FacebookTwitterPinterestEmail Uneeb Khan Uneeb Khan CEO at blogili.com. Have 4 years of experience in the websites field. Uneeb Khan is the premier and most trustworthy informer for technology, telecom, business, auto news, games review in World. previous post Important Benefits Of Having Torsion Testing next post How to setup wps in for hp printer? Related Posts Portfolio Optimization: Enhancing Return Potential While Mitigating Risk April 18, 2024 6 Best Methods For Eliminating Germs And Disinfecting... April 16, 2024 Unveiling The Best Cars Under 40 Lakh In... April 16, 2024 When Is the Right Time to Hire a... April 15, 2024 KMSPico and Kernel Reliability – Addressing Worries and... April 10, 2024 Pros and Cons of Revenue-Based Financing (RBF) April 9, 2024 The Power of User-Generated Content in Dog Marketing... April 7, 2024 Enhancing Patient Experience: The Role of Innovative Dental... April 6, 2024 Customer Satisfaction: Tips for Providing Feedback to Your... April 5, 2024 Cabinet Color Magic: Transforming Your Kitchen April 5, 2024