1) Unsecured Loans
2) Claim Expenses
3) Pvt Company
To drastically lower their taxes.
Have spoken to a lot of CA's and have got this information from them.
Follow these steps to pay lower taxes: ↓
How do I save taxes above 50,00,000 income?
• Not hiding income
• Not spending too much time
• Not trading in multiple accounts simultaneously
It's the same process that the top traders & fund managers use to save taxes. It works.
THREAD: 🧵
Collaborated with @niki_poojary
1) Unsecured Loans
2) Claim Expenses
3) Pvt Company
To drastically lower their taxes.
Have spoken to a lot of CA's and have got this information from them.
Follow these steps to pay lower taxes: ↓
The first thing traders do is loan their money to their family members to trade in their accounts so that they can make a profit in the family members' name.
This way the tax is divided by different names.
So you don't have to pay taxes on one name only.
They use "Unsecured Loans".
It is completely legal to give a loan to your family.
Once they get the loan in their account, they can use that money to start trading.
30% tax is charged above 15 lakhs income.
Until 15 lakhs, you can trade in their names.
This would be much better than making 60 lakh income on one name only.
Not only are you charged a lower tax rate by doing this, but you also make use of the no-tax slabs.
There is no tax on the first 2.5 lakhs of income for an individual.
Assuming a family of 4, you can avail this 2.5L benefit amongst your family.
You did not pay tax on 10L (2.5*4) of your income as a result.
Another benefit of this "unsecured loan" is to avoid the surcharge one has to pay above 50 lakhs income.
Since not one person is earning 50 lakhs for himself, no question of a surcharge.
Do I have something for traders earning more than 50 lakhs?
Yes. They form a Private Limited Company.
Let's learn why ahead.
Form a company with family members and trade under it.
The family members should be directors of the company.
Why form a company?
You will only need to pay 25% flat tax whereas Individuals have to pay 30% tax above 15 lakh profits.
You will be charged a lower surcharge in a corporate account.
Check the picture below:
The total tax outlay for individuals is 30% plus a surcharge.
If you earn a lot (10 cr +) then you will be paying 42% tax.
Whereas in a company you'll be paying a maximum of 28% tax.
This is how rich people save a lot of their money by paying lower taxes.
All expenses can be deducted from a company account.
Companies:
1. First make a profit.
2. then deduct the expenses
3. & Pay tax on the remaining income
Individuals:
1. First Profit
2. Then Pay tax
3. Expenses with whatever is left.
Individuals are first charged taxes and then get to spend with the remaining amount.
Over a long period, this turns into a huge gain for companies.
1. Office Rent
2. Petrol
3. Car Depreciation
4. Salaries
5. Travel
6. Food in restaurants
Additionally, get to deduct housing loans as well.
To trade, each of us needs:
• Computers
• Laptop
• Mobiles
This is absolutely basic to our business.
After that, in order to connect to
• The markets and
• Place orders
We also need an internet connection.
• Television to watch the news
• Air conditioner
• Fridge
Since these are related to your business, which is trading, these expenses can be claimed.
As a result, your tax will reduce.
• Different instruments and
• Multiple stocks.
You cannot place all these orders manually.
So you can hire dealers to punch orders for you.
People who manage other people's money also hire dealers to punch orders in multiple accounts.
Utilize their salaries, which your company incurs as an expense, to reduce your taxes.
If you travel for some business event, you can claim the:
• Flight tickets
• Food costs and
• Hotel stay
You can claim these costs as an expense when conducting meetings with clients or events.
The majority of traders lose money in the stock market.
If you are one of them, you can show your losses, and then when you make a profit from trading, offset these losses.
This will reduce your taxable income in subsequent years.
You can open a HUF for tax-saving purposes. This becomes a separate entity.
You can claim different expenses here as well.
Many of my trader friends are doing this to reduce taxes.
Since all the family members will be directors in the company, the company can receive a loan from its directors without any hassle.
Start trading with that loan that you've given yourself.
Don't repay the loan.
Keep paid-up capital as 1 lakh only.
Anything above that is a loan from directors.
I have confirmed this with multiple traders.
No NBFC licence is required. Have confirmed this with multiple CA's and multiple traders too.
https://t.co/KxVJcQJy1c
My CA told me, if I form a company to trade then I have to register it as an NBFC. Is this true?
— Aditya Todmal (@AdityaTodmal) January 7, 2022
Whoever trades in company accounts can you dm me, please?
If you're making a profit of higher than 50 lakhs then it makes sense to transfer money to a corporate account and trade from it rather than on an individual name as there are compliance costs as well.
In a corporate account, it will be easy to claim depreciation.
Tough to do in an individual account.
Additionally, all interest paid is considered an expense if you buy a property in the company name.
Everything you buy, buy under the company name. The total tax you pay will be lesser than 25%.
These are the advantages of trading in a corporate account. If you know of any other benefits list them below.
We have a free Youtube Channel where we cover our analysis of the markets.
If interested feel free to join using this link: https://t.co/nn32SaAej5
If you enjoyed this thread:
1. Follow us @Adityatodmal & @niki_poojary for more threads on Price action, Option Selling & Trading growth.
We've got you covered.
2. RT the first Tweet to share it with your audience.
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More from Aditya Todmal
The most successful stock trader from America & the winner of all the trading competitions he competes in.
20 Powerful tweets to learn from @markminervini
A 🧵thread...
Jesse Livermore
Never let a loss exceed 8% changed his trading game for the
Key early decisions to make for your trading
Never listen to
20 Powerful tweets to learn from @markminervini
A 🧵thread...
Jesse Livermore
Some important quotes by Jesse Livermore... pic.twitter.com/UklL86oTvb
— Mark Minervini (@markminervini) June 16, 2021
Never let a loss exceed 8% changed his trading game for the
The big turning point in my trading came when I made a decision and vowed to NEVER EVER let a loss exceed 8%. During the next 5 years I averaged 220% per year for a total compounded return of 33,500%. It's been 28 years since and I have never broken that discipline not even once!
— Mark Minervini (@markminervini) April 26, 2021
Key early decisions to make for your trading
A few key decisions early in my trading career and my financial life completely changed for the better in just a few years.
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1. No big losses
2. No averaging down
3. No chasing extended stocks
4. No giving back decent profits
5. Always get odds on my money
Never listen to
Only losers discourage dreamers. Only those who never achieved big things discourage those attempting to achieve big things. Only those who think small discourage those who think big. Never believe discourages. The have no credibility! Believe winners. Believe in YOU! \U0001f447 pic.twitter.com/JdAhRy3lRJ
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A THREAD ON @SarangSood
Decoded his way of analysis/logics for everyone to easily understand.
Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen
1. Keeps following volatility super closely.
Makes 7-8 different strategies to give him a sense of what's going on.
Whichever gives highest profit he trades in.
2. Theta falls when market moves.
Falls where market is headed towards not on our original position.
3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result
He believes in a market operator, if market mover sells volatility Sarang Sir joins him.
4. Theta decay vs Fall in vega
Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.
Decoded his way of analysis/logics for everyone to easily understand.
Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen
1. Keeps following volatility super closely.
Makes 7-8 different strategies to give him a sense of what's going on.
Whichever gives highest profit he trades in.
I am quite different from your style. I follow the market's volatility very closely. I have mock positions in 7-8 different strategies which allows me to stay connected. Whichever gives best profit is usually the one i trade in.
— Sarang Sood (@SarangSood) August 13, 2019
2. Theta falls when market moves.
Falls where market is headed towards not on our original position.
Anilji most of the time these days Theta only falls when market moves. So the Theta actually falls where market has moved to, not where our position was in the first place. By shifting we can come close to capturing the Theta fall but not always.
— Sarang Sood (@SarangSood) June 24, 2019
3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result
He believes in a market operator, if market mover sells volatility Sarang Sir joins him.
This week has been great so far. The main aim is to be in the right side of the volatility, rest the market will reward.
— Sarang Sood (@SarangSood) July 3, 2019
4. Theta decay vs Fall in vega
Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.
There is a difference between theta decay & fall in vega. Decay is certain but there is no guaranteed profit as delta moves can increase cost. Fall in vega on the other hand is backed by a powerful force that sells options and gives handsome returns. Our job is to identify them.
— Sarang Sood (@SarangSood) February 12, 2020
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"I lied about my basic beliefs in order to keep a prestigious job. Now that it will be zero-cost to me, I have a few things to say."
We know that elite institutions like the one Flier was in (partial) charge of rely on irrelevant status markers like private school education, whiteness, legacy, and ability to charm an old white guy at an interview.
Harvard's discriminatory policies are becoming increasingly well known, across the political spectrum (see, e.g., the recent lawsuit on discrimination against East Asian applications.)
It's refreshing to hear a senior administrator admits to personally opposing policies that attempt to remedy these basic flaws. These are flaws that harm his institution's ability to do cutting-edge research and to serve the public.
Harvard is being eclipsed by institutions that have different ideas about how to run a 21st Century institution. Stanford, for one; the UC system; the "public Ivys".
As a dean of a major academic institution, I could not have said this. But I will now. Requiring such statements in applications for appointments and promotions is an affront to academic freedom, and diminishes the true value of diversity, equity of inclusion by trivializing it. https://t.co/NfcI5VLODi
— Jeffrey Flier (@jflier) November 10, 2018
We know that elite institutions like the one Flier was in (partial) charge of rely on irrelevant status markers like private school education, whiteness, legacy, and ability to charm an old white guy at an interview.
Harvard's discriminatory policies are becoming increasingly well known, across the political spectrum (see, e.g., the recent lawsuit on discrimination against East Asian applications.)
It's refreshing to hear a senior administrator admits to personally opposing policies that attempt to remedy these basic flaws. These are flaws that harm his institution's ability to do cutting-edge research and to serve the public.
Harvard is being eclipsed by institutions that have different ideas about how to run a 21st Century institution. Stanford, for one; the UC system; the "public Ivys".
