1. Redeem >1 year old units every year only to the extent of availing 1 lakh LTCG tax exemption, instead of redeeming all your >1 year old units each year.
2. Thereafter, this redeemed corpus should be reinvested in a systematic manner over the entire year, instead of in lump sum tranches.
3. This process will be more beneficial because:-
a) It will keep you free from LTCG tax for several consecutive years, irrespective of the market's ups and downs, as you'll always have qualifying units to redeem.
b) It will allow the total corpus to continue compounding for a longer term due to the laddering of your units.
c) It will allow scope to redeem more amounts at specific times when you need them for your various goals with least tax during that year.
d) It will also help you to avail any increase in tax exemptions which annual budgets may provide in future.
e) It will help you manage any future increase in LTCG tax rate too.
4. In this way, you'll also be able to meet your aim of keeping your entire corpus invested always.
5. For simple effective implementation, avoid over-diversifying your corpus in too many funds, and make the chosen ones need-based for meeting your goals.
6. While it is best to do your own computation for its efficient implementation, it would suffice to say that remaining tax-free for several years, by availing up to 1 lakh tax exemption on LTCG every year through specific redemption and systematic reinvestment mode, is more tax-efficient than availing only 1 lakh tax exemption on the entire accumulated gains during one-time single redemption at the end of several years.
7. Redemptions of units to avail 1 lakh LTCG exemption every year should be utilized for your annual expenses first and the remaining surplus should be reinvested during the entire year through SIP/STP in the same earmarked funds.
8. Reinvesting the redeemed amount in a systematic manner throughout the next year, if you don't need it immediately, is more prudent, for cost-averaging benefits and laddering of investments, as it would be handy subsequently.
9. You could do it directly from the bank account in which your redemption amount got credited (by way of monthly SIPs), or through a liquid fund of your desired equity fund's fund house (as monthly STPs), as both expenses would be comparatively minimal, when compared to your tax-free capital gains.
2. Thereafter, this redeemed corpus should be reinvested in a systematic manner over the entire year, instead of in lump sum tranches.
3. This process will be more beneficial because:-
a) It will keep you free from LTCG tax for several consecutive years, irrespective of the market's ups and downs, as you'll always have qualifying units to redeem.
b) It will allow the total corpus to continue compounding for a longer term due to the laddering of your units.
c) It will allow scope to redeem more amounts at specific times when you need them for your various goals with least tax during that year.
d) It will also help you to avail any increase in tax exemptions which annual budgets may provide in future.
e) It will help you manage any future increase in LTCG tax rate too.
4. In this way, you'll also be able to meet your aim of keeping your entire corpus invested always.
5. For simple effective implementation, avoid over-diversifying your corpus in too many funds, and make the chosen ones need-based for meeting your goals.
6. While it is best to do your own computation for its efficient implementation, it would suffice to say that remaining tax-free for several years, by availing up to 1 lakh tax exemption on LTCG every year through specific redemption and systematic reinvestment mode, is more tax-efficient than availing only 1 lakh tax exemption on the entire accumulated gains during one-time single redemption at the end of several years.
7. Redemptions of units to avail 1 lakh LTCG exemption every year should be utilized for your annual expenses first and the remaining surplus should be reinvested during the entire year through SIP/STP in the same earmarked funds.
8. Reinvesting the redeemed amount in a systematic manner throughout the next year, if you don't need it immediately, is more prudent, for cost-averaging benefits and laddering of investments, as it would be handy subsequently.
9. You could do it directly from the bank account in which your redemption amount got credited (by way of monthly SIPs), or through a liquid fund of your desired equity fund's fund house (as monthly STPs), as both expenses would be comparatively minimal, when compared to your tax-free capital gains.