Mom, why is everyone suddenly so busy in July?”, Kavya (K), my daughter asked. 

 

It was nearly midnight. One screen showed highlights of the India-England Test. Another replayed Spain's winning goal from the FIFA final. A third held nearly twenty PDFs - AIS, Form 26AS, broker statements, ESOP records, all waiting to be reconciled.

 

My Chartered Accountant had just messaged “Need one more reconciliation before tomorrow morning.”

 

K, coffee in hand, was amused. “You always tell me not to leave studying until the night before an exam. Why are you doing exactly that?”

 

“Because every July, even people who advise others on taxes end up burning the midnight oil.”

 

K:“So tax season is like exam season?”

 

“No. It's worse.”

K turned towards me and asked “What do cricket, Formula One and football possibly have to do with filing an Income Tax Return?”

 

“Everything,” I replied. Championships, in cricket, in Formula 1, or in football, are never won at the finish line. They are won through disciplined decisions made across the season.

 

What followed was a two-hour conversation.

 

K: “So buying an ELSS fund in March isn't tax planning?”

 

“It is, but it's one ball in a three-hundred-ball innings.”

 

Most investors play only one shot all year: exhausting the Section 80C deduction through ELSS, PPF or insurance every March, then declaring victory. Saving tax under Section 80C may reduce your tax liability, but it is only one decision in an entire season of decisions.

 

The real match involves far more. Investors focus on tax-saving investments in March but ignore advance tax for the rest of the year. Suppose you sold shares in August and earned a capital gain of ₹50 lakh. You cannot simply wait until next July to pay tax on it. Once the liability crosses the prescribed threshold, advance tax provisions apply and delayed payment triggers interest under Sections 234B and 234C. Not a penalty for bad batting; a penalty for a slow over-rate. Investors spend weeks searching for investments that generate an extra 1% return. Yet many quietly lose a similar amount every year through avoidable interest on delayed advance tax payments.

 

K: “Why didn't you sell this investment last month? It had already gone up.”

 

“Because sometimes the difference between waiting three weeks and selling today isn't investment performance. It's taxation.”

 

Holding periods often determine whether gains are taxed as short-term or long-term capital gains. Two investors may buy the same stock at the same price. One sells after eleven months. The other waits until the applicable long-term holding period is complete. Same company, same return, but completely different tax outcome. The difference between being run out on 99 and completing a century.

 

K: “Why would anyone deliberately book a loss?”

 

Every portfolio has investments that underperform. Ignoring them serves little purpose. Tax-loss harvesting allows investors, subject to the applicable rules, to realise losses strategically so they can offset eligible gains and improve post-tax outcomes. Professionals don't celebrate losses, they simply refuse to waste them.

 

Every decision, when you invest, when you sell, how long you hold, when you pay taxes, how you manage gains and losses, adds to the scoreboard. Imagine a batsman on 99. One more run gives him a century. But imagine that one extra run also changes the rules of the game. That's how surcharge sometimes feels. The objective isn't to avoid earning more. It's to understand whether income can be legitimately timed or spread across financial years, where commercially feasible, to improve overall tax efficiency. Professional investors don't merely ask, “How much did I earn?” They ask, “When should I recognise it?”

 

K: “Mom, Rahul, my cousin, just joined Google. He keeps talking about RSUs… sometimes ESOPs… honestly, I don't even know the difference. But he says he'll be a crorepati before he turns thirty.”

 

“Most people use the terms interchangeably,” I smiled. “But they aren't the same. And if he wants to become that crorepati, he should first understand how both are taxed, otherwise, the tax department may celebrate before he does.”

 

 

Say Rahul receives 400 Google RSUs. At vesting, Google trades at $250 and the rupee is at ₹87 - worth ₹87 lakh. He hasn't received cash and hasn't sold anything, yet under Indian law the fair market value of vested RSUs is generally taxed as salary (perquisite income) at his slab rate. He is paying tax before receiving liquidity. If he holds and the stock rises 60% over two years, that ₹87 lakh grows to roughly ₹1.39 crore - and the appreciation after vesting is taxed separately as capital gains. Two different economic benefits, taxed separately: the grant as salary, the growth as investment income. Rahul's salary, bonus and future RSUs already depend on Google. Before exercising ESOPs or holding RSUs, ask: for foreign shares, have I considered disclosure, foreign tax credit and Schedule FA reporting?

 

K: “Okay, I got it. What about crypto? It's anonymous, isn't it?”

 

It once was. But technology and international information-sharing changed that story, and the same shift is now underway with crypto. Blockchain may be decentralised, but Indian tax administration increasingly relies on data analytics: banks, exchanges, depositories and VDA platforms report transactions, which investors are expected to reconcile against their Annual Information Statement (AIS).

 

The costly assumption: invest ₹40 lakh across three cryptocurrencies - Bitcoin gains ₹20 lakh, Ethereum loses ₹15 lakh, Solana gains ₹5 lakh. Most investors assume taxable income is ₹10 lakh, net. Under the current VDA regime, that's generally wrong. Gains are taxed at a flat 30% (plus surcharge and cess), and losses generally cannot be set off against other VDA gains or carried forward. So instead of tax on ₹10 lakh, tax applies on ₹25 lakh of gains, roughly ₹7.5 lakh instead of an expected ₹3 lakh. One misunderstanding, a ₹4.5 lakh difference.

 

TDS of 1% on specified transactions above prescribed thresholds isn't an extra tax — it's adjusted against final liability, though frequent trading means repeated deductions can squeeze available capital. And every trade counts, even swapping Bitcoin for Ethereum with no cash involved: under the current framework, exchanging one VDA for another can itself be a taxable transfer. Tax law follows the transfer of value, not just the receipt of cash.

 

K: “So if I ever invest in crypto, what should I remember?”

 

Every crypto investor should ask:

 

• Have I maintained records of every purchase, sale and exchange?

• Have I reconciled my transactions with my tax records?

• Have I correctly reported gains, even if no money was withdrawn to my bank account?

• Have I accounted for TDS deducted by the exchange?

• Am I assuming losses can be adjusted when the law may not permit it?

 

Because in today's tax environment, it is not just your profits that leave a trail — your transactions do too.

 

K: "Mom, I only bought ten Apple shares."

 

"Surely the Income Tax Department isn't interested in something so small?"

 

Buying even ten Apple shares through an overseas broker starts an international tax relationship, tax laws are built on principles, not portfolio size.

 

K: “So where do I mention these shares?”

 

“In your Income Tax Return, there's a schedule specifically meant for reporting foreign assets, commonly known as Schedule FA, where applicable.”

 

K: “Why?”

 

“Because India taxes its residents differently from the way many investors assume.”

 

If you qualify as an Indian tax resident and the reporting requirements apply, Schedule FA may require disclosure of specified foreign assets such as:

 

• Overseas bank accounts

• Foreign brokerage accounts

• Shares of companies like Apple, Google or Microsoft

• RSUs received from multinational employers

• Foreign mutual funds and ETFs

• Overseas retirement accounts

• Foreign partnership interests

• Certain immovable property outside India

 

“Notice something? The law asks what you own, not merely what income you earned.”

 

India's Double Taxation Avoidance Agreements (DTAAs) and the Foreign Tax Credit (FTC) mechanism let investors claim credit, subject to documentation, for foreign tax already withheld. For instance, $25,000 withheld on a ₹1 lakh-equivalent Apple dividend need not be lost outright. But FTC must be claimed correctly and on time, with proper documentation and compliance with prescribed procedures.

 

Many investors fail to preserve tax withholding statements, miss filing requirements, calculate exchange rates incorrectly, or simply don't claim the credit at all. The result: they effectively pay more tax than the law intended.

 

K: “But how would India even know I have a brokerage account in another country?”

 

“Twenty years ago, that was a fair question. Today, it isn't.”

 

Many countries now exchange financial account information under international frameworks such as the Common Reporting Standard (CRS). Similarly, the Foreign Account Tax Compliance Act (FATCA) requires financial institutions to identify and report certain account holders connected with the United States, while Indian financial institutions also collect FATCA/CRS self-declarations as part of account opening and compliance.

 

“The world has become interconnected, not just for investments, but also for tax reporting.”

 

K: “Last month my friend invested in US stocks through LRS. What exactly is LRS?”

 

“LRS, the Liberalised Remittance Scheme, is the RBI framework that allows resident individuals to remit money overseas for permitted purposes, subject to the prescribed annual limit.”

 

Today, people use it for buying US stocks, investing in global ETFs, funding overseas education, purchasing property abroad where permitted, opening foreign brokerage accounts, and investing in overseas startups.

 

K: “So once the money leaves India, is the tax story over?”

 

“No. That's where the tax story actually begins.”

 

Investors must also think about reporting foreign assets, foreign dividends, capital gains, exchange-rate conversions, foreign tax credits, and Tax Collected at Source (TCS) on applicable remittances under LRS.

 

“Many people think LRS is just a bank transfer.”

 

“It's actually the beginning of an international tax relationship. They spend months researching which global stock to buy and almost no time understanding how to report it.”

 

Most investors think compliance begins when wealth becomes large. In reality, it begins the moment your investment crosses national borders.

 

K: “Singapore doesn't tax capital gains; Dubai has no personal income tax, so why doesn't everyone relocate?”  

 

Because tax is one chapter, and life is a much bigger book. Choosing a country is like choosing a life partner: you don't compare one characteristic, you compare the entire relationship - family, business, legal systems, residency rules, succession laws, healthcare, education, culture and citizenship. Residency, not citizenship, decides taxation. Each country weighs days spent, permanent home, economic ties, employment or habitual residence differently. Two people with identical passports can face very different obligations. Tax residency should be planned before relocation, not discovered while filing a return.

 

And some things simply have no tax treaty: grandparents, children's schools, family traditions, friendships and healthcare familiarity don't appear anywhere in the Income-tax Act, yet they shape quality of life.

 

“Markets teach us to diversify,” she said. “Life teaches us to balance.”

 

The house had grown quiet. The cricket highlights had ended. The Formula One podium celebrations were over. The football stadium had emptied. I finally shut my laptop.

My daughter picked up her notebook, now filled with scribbles. She stood up, paused at the door, and turned around one last time.

 

K: “Mom… what is the biggest mistake investors make?”

 

“Believing that investing ends the day they buy an asset,”

 

I said. “In reality, every investment moves through five stages.”

 

 

 

 

 

My dear readers, learn how to own, protect, report, monetise and transfer wealth; that is the difference between becoming rich and building generational wealth. Successful investing is about ensuring every rupee is earned wisely, owned intelligently, reported honestly, monetised efficiently, and transferred thoughtfully. Because the objective of wealth is not merely to pay the least tax. It is to build the best life.

 

 

The better question is:

 

“Where and how can my family, my business and my wealth all thrive together for decades?”

 

Best Regards

 
Dr. Tarunika Jain Agrawal Ph.D. 

Alpha Research

 

 

 
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