Nithin Kamath has an advice for investors who want to avoid capital gains tax. Check here

In a witty jibe at paying capital gains tax, Nithin Kamath, co-founder and chief executive officer of online stock brokerage firm Zerodha, offered tips on how to avoid paying it. Nikhil Kamath shared a meme on X to share his views.

In his light-hearted advice, Kamath suggested that investors start by researching the best stocks. However, he added a slight twist: once they identify these top stock picks, they should ideally just ignore them and buy the worst performers instead. This strategy, Kamath quipped, would result in losses, meaning investors would get no capital gains. And with no capital gains, investors could dodge paying taxes on such investments.

“Now that we have processed the capital gains tax increase, here's something on a lighter note,” Kamath posted on X.

In Budget 2024, Finance Minister Nirmala Sitharaman announced significant tax proposals for investors in the Indian stock market. The finance minister hiked the Securities Transaction Tax (STT) rate on equity and index trades.

The Long-Term Capital Gain (LTCG) Tax was increased to 12.50% from 10%, and the Short-Term Capital Gain (STCG) Tax to 20% from 15%.

Additionally, the Securities Transaction Tax (STT) rate has doubled from 0.01% to 0.02%, which would significantly impact equity and index traders involved in Futures and Options (F&O) transactions. This will increase the tax burden on equity and index traders involved in F&O transactions.

Despite the holding period, unlisted bonds and debentures, debt mutual funds and market-linked debentures will still attract tax on capital gains at applicable rates.

"We wanted to simplify the approach to taxation - also for the capital gains. Second, if anything, the average taxation has actually come down when we say it is 12.5%. We have worked out for each of the different asset classes. The point that we brought it down from below the average to 12.5% encourages investment in the markets," the finance minister said after the Budget 2024 speech.

According to Nirmala Sitharaman, the goal of such changes in the tax regime was to simplify the system.

In her budget speech, she said, “We will continue our efforts to simplify taxes, improve taxpayer services, provide tax certainty, and reduce litigation while enhancing revenues for funding the development and welfare schemes of the government.”