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Tag Archives: Indexation benefit

Using indexation to earn a guaranteed tax free profit, yet book a loss


 

 

The captioned statement may sound too good to be true, and it is only fair if you think – “there must be a catch somewhere”. Honestly, there isn’t and this concept of indexation benefit, if properly understood and implemented, is one of the most powerful tax planning tools; and if timed correctly can not only be used to make your returns on debt and debt oriented investments tax free, but also enable you to book a long term capital loss which can be offset against any other long term capital gains.

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Understanding and applying indexation


The previous post on capital gains mentions two ways of taxation for various asset classes- 10 % without indexation, and 20 % with indexation. What exactly is indexation, why is it required, and how to arrive at the indexed value? Let us find out –

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