Tax Saving Options for High Net worth Investors In 2016

BENGALURU: The 2 percent additional surcharge has been proposed on individuals having a taxable income of 1 crore (10 million) and above. Therefore, the individuals falling under this category of tax payers can be perceived as the high net worth investors, or HNIs, class, according to yahoo.com.

Bonus Stripping Saves Tax:

Bonus stripping in shares is an option where an investor buys shares of a company which has announced bonus on its shares and later sells them off after bonus date and book notional loss. This notional loss can be legally adjusted against the short term capital gain or long term capital gain from any capital assets for the year. Unadjusted loss can be carried forward to 8 financial years. This is a good strategy for high tax bracket investors.

Investing In Tax-Inefficient Options:

Debt funds allow deferring the tax till the investors withdraw the investment. If the taxpayer holds these for three years, he will get the benefit of lower tax as the income from debt funds will be treated as long-term capital gains and taxed at 20 percent after allowing benefit of indexation. An investor in 30 percent tax bracket would have to pay 10,028  tax on a 3-year fixed deposit of 1 lakh.

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