How to calculate taxation on capital gains?
Finance
Mutual funds and shares give income from two sources - dividend and capital gain/loss:
Capital gain = Sale price of asset > Purchase price of asset
Capital loss = Sale price of asset < Purchase price of asset
Tax on dividend: The dividend received in a year is added to the income of that financial year and taxed according to investors’ income tax slabs.
Mutual funds: Capital gains
Two categories:
Equity oriented schemes (schemes with >= 65% allocation to equities)
Non-equity oriented schemes (schemes with < 65% allocation to equities)
Non-equity mutual funds include debt funds, liquid funds, money market funds and infrastructure debt funds.
SIP duration calculation
Systematic Investment Plan (SIP) is automated regular investments of your preferred amount in your preferred asset, generally used for mutual fund investments.
Each installment of SIP is considered a separate investment since units are purchased at different dates at different prices, thus the investment beginning date is the date of that particular SIP (installment) and not the first SIP towards that fund/scheme.
For example - You started SIP of INR 1000 monthly for an equity-oriented Fund X on April 1, 2020. Each month INR 1000 is invested in Fund X at different unit rates.
On July 30, 2021, the SIP purchased on April 1, 2020, has completed more than 12 months holding period, so has the one purchased on June 1, 2020, but not the one purchased on December 1, 2021. As of July 30, 2021, 12 months have not been completed.
Even your lock-in period is calculated for each SIP separately.
Indexation benefits
Indexation refers to re-calculating the purchase price by adjusting it for inflation. The adjustment is based on the inflation index published by the income tax authorities. Indexation leads to a higher purchase price, i.e. the inflation-adjusted purchase price. A higher purchase price means lower capital gain and thus, lower tax liability due to capital gain.
Gold, property, and non-equity-oriented funds offer an indexation benefit while calculating capital gain, thus reducing your tax liability.
The Cost Inflation Index (CII)
Let’s say, you invested INR 5000 in MF in 2016-17, the purchase price after indexation (CII of sale year/CIII of purchase year * actual cost of purchase) = 301/264 * 5000 = 5,700.76. So, if the current price is INR 8000, your long term capital gain (LTCG) is 8000 – 5700.76 = INR 2299.24
The primary idea for indexation is to factor in the rise of prices so that investors have to pay tax only on the “real gains”.
Capital gain on shares
Any unabsorbed short and long term capital losses can be carried forward to subsequent 8 years, to be set-off against short and long term gains made during these 8 years.
Imposter Syndrome: Hysteria or just a feeling?
Opinion
Have you ever felt like you’re not good enough for that award? Do you ever fret about the smallest mistakes and attribute your success to luck or external factors? This constant process of doubting your abilities that prevents you from progressing is called imposter syndrome.
It would surprise you to know that 70% of people feel this way at one time or another. Imposter syndrome can be extremely self-limiting and could become a vicious cycle of self-rejection.
Significant disparity
While this syndrome affects all genders and workplaces, there’s a significant disparity between how badly it affects men and women. According to a study, 79% of women lacked confidence at workplaces, versus 62% of men at the same offices. The disparity could majorly be attributed to the fact that women are told (implicitly/explicitly) that they’re infiltrating male designated spaces. This is why they feel the need to do more and prove their standing.
Even famous women like former First Lady Michelle Obama and business leaders such as Sheryl Sandberg have confessed to experiencing it. In her book Lean In, Sheryl Sandberg cites studies that prove that the prevalence of imposter syndrome amongst women is in large part due to their general lower self-confidence. For example, “assessments of students on a surgery rotation found that when asked to evaluate themselves, the female students gave themselves lower scores than the male students despite faculty evaluations that showed the women outperformed the men.”
Stereotypes
However, one could buck the odds that men do feel it a lot more than they show only to seem less vulnerable. Over years, the stereotypes prevailing in workplaces have projected men as the stronger set that would be unlikely to seek help. This pressure of being unable to admit to imposter syndrome can make men feel the brunt of the symptoms even more.
Nevertheless, with changing times, gender inequalities are gradually fading away from workplaces. Today, more than ever, it’s critical to foster a supportive work culture that could channel self-doubt into motivation. Recognizing that imposter syndrome is just a feeling and admitting it to yourself can only help in overcoming the same faster.
Once there is acceptance for this anxiety the medical undertone of “syndrome” will mellow down and you can actively attempt to take the leap. Remind yourself of all the success stories from the past and it’ll instill confidence to achieve greater heights again. Lastly, talking to friends at work and seeking constructive feedback will never hurt. When praise comes from dear ones, the brain is likely to believe it more.
The bottom line is that leaders in the workplace need to recognize and do away with systematic biases to help create an environment that could curb imposter syndrome for one and all.
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