Published On: Tue, Nov 6th, 2018

What are some smart saving options

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Recent guidelines state that it is now mandatory to open Demat account to trade on a day-to-day basis or convert your physical share certificates to a dematerialised or electronic form. Holding a Demat account ensures your securities are protected against theft or loss. Interestingly, you could also save taxes through your Demat account with the help of smart tax management ways. Here are a few ways how experienced shareholders save on taxes through their Demat accounts.

1.       Tax savings on dividends

As a shareholder, you may receive dividends from listed companies, which is a portion of the company’s profits to you. As a Demat account holder owning shares of a listed company, you too may receive dividends occasionally. You do not need to pay tax on the dividend amount you obtain from any Indian company if the total dividend amount is below Rs. 10 lakh per company. Most investors employ such dividends as an alternative source of income. Your Demat account not only gives you the benefit of owning shares with the listed company but also gets you tax-free dividends.

2.       Benefiting from capital gains

For instance, you may want to sell the shares of a listed company to another investor at a higher price. The profit you earn from the sale is capital gain. Here, you can also save taxes on capital gains.

  • Holding on to the shares for a period – You are taxed on capital gains only if you sell them as soon as you buy them. These short-term capital gains are taxable. However, if you hold onto the shares for three years or more after its purchase, and sell them afterwards, a tax of 10% will be applicable for the amount exceeding Rs. 1 lakh. Most experienced shareholders make use of this tax saving scheme by holding on to their shares for extended periods in their Demat account.
  • Handling short-term capital loss – If you sold your stocks at a loss after holding onto them for a short period, do not be disheartened. You can manage your short-term capital losses by aligning with taxes levied on short-term capital gains. As an investor with a Demat account, you can balance your capital loss on asset classes that are equity-based or unrelated to equity, by utilising tax benefits on short-term capital gains.
  • Carrying forward losses – If you have consecutively experienced many short-term capital losses, you can carry over the loss to be set off on short-term capital gains for up to eight years. However, the only condition is that the loss must be adjusted with some profit from the same asset class. In spite of it, you still hold the vantage point as a Demat account holder, since you are prospecting the share market and looking forward to saving money for the long run.


  1. Equity Linked Tax Saving Schemes (ELSS)

Individuals who earn income have to pay various taxes. This is especially true for salaried people. To manage tax deductions, the government offers an opportunity to save money through the Equity Linked Tax Saving Scheme. The ELSS is an open-ended saving scheme that uses equity mutual funds while providing exemptions from tax under Section 80 C of the Income Tax Act. With a Demat account, you can invest in ELSS-based investment schemes provided by your brokerage firm such as Kotak Securities, to grow your earnings.


Although finding ways to earn money is vital to fund your financial goals, it is also essential to seek legal means to save and maximise your earnings. Numerous government schemes offer tax exemptions, and hence opening a Demat account with leading brokers such as Kotak Securities, banks and other depository participants can help you invest in stocks of listed companies.

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