A demat account is a must-have for any investor who wants to trade in the stock market. Not only does it make the process of buying and selling shares more convenient, but it also comes with several tax benefits. In this article, we will take a look at how you can avail tax benefits with a demat account.
The first step to avail tax benefits with a demat account is to open one. This can be done through a depository participant (DP), who is a member of the National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL). Once you have opened a demat account, you can start buying and selling shares through it.
One of the biggest tax benefits of having a demat account is that all your transactions are recorded electronically. This means that there is a clear record of all the shares you have bought and sold, which makes it easier for you to calculate your capital gains. Additionally, when you sell shares through a demat account, the long-term capital gains are taxed at a lower rate of 10% as compared to the short-term capital gains which are taxed at the rate of 15%.
Another tax benefit of having a demat account is that you can avail tax deductions under 80C section of the IT Act for investments made in ELSS or Equity Linked Savings Schemes through a demat account. These schemes are equity mutual funds that have a minimum gestation period of three years, and they offer tax benefits up to Rs 1.5 lakhs per year.
You can also avail tax benefits on dividends received through your demat account. Dividends received by individuals are tax-free up to Rs 10 lakhs per financial year. Any amount exceeding this limit will be taxed at 10%.
To simplify the process of availing tax benefits with a demat account, you can use the MO Investor app. This is a mobile app that allows you to open demat account and also track your investments and returns. With the app, you can view your portfolio, transaction history, and tax-related details, all from the comfort of your mobile phone.
In conclusion, having a demat account is a great way to avail tax benefits while trading in the stock market. Not only does it make the process of buying and selling shares more convenient, but it also comes with several tax benefits. To make the process even more seamless, you can use the MO Investor app to open a demat account and track your investments and returns.