You can always sell stocks if you think you will make profits, and this happens because you had earlier purchased at a lower rate than their current value. While there is no rule stopping you from buying shares online after you have sold them before, there are certain regulations about the reason for sale. When you buy stocks online after you have sold them previously, you must be cognizant of particular aspects of the transaction.
If you sell your stock at a loss, you typically don’t pay any tax as you don’t make any gains. The losses from investment assets are capital losses. Gains/profits are called capital gains (on which you have to pay taxes). Losses can be offset against any capital gains or the income shown on your Income Tax Return. This saves tax. In case you sell your stock at a loss, you cannot buy back stocks instantly as this is called a wash sale tactic, used just for the purpose of avoiding tax. There is a period to wait before you can buy the stock back. If you buy stocks online just after selling them at a loss (your motive being to avoid tax), you won’t be able to avail capital losses. Technically, you have to wait before you buy the stocks you sold for losses back.
In case you sell stocks to make a profit, you gain from stock sold. So you have to pay capital gains tax on the profit. If you are wondering when to sell a stock for profit, then this obviously sounds like the right thing to do. It is, and in many cases, traders do sell a stock to make substantially higher profits when values increase.
When you invest in stocks online, you should do so at a broker that gives you advice on how to trade and when to sell your stocks for maximum profit. At Motilal Oswal, not only can you open a free online Demat account, but avail of trading information that helps you to see your investments being profitable. It is always possible to sell a stock for profit purposes, as the Income Tax Department has you paying taxes on the profit you make. This is, as mentioned earlier, a capital gains tax. You can buy the same stock back at any time, and this has no bearing on the sale you have made for profit. Rules only dictate that you pay taxes on any profit you make from assets.
When should you sell a stock for profit? The answer lies in when you can make maximum profit from a stock and whether you are a short-term investor or a long-haul investor. You can find more information at Motilal Oswal, your one-stop financial shop.
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