what are returns on equity investment? and what type of returns on equity investment? all information is available is hear. just click here.
There are four ways by which you earn returns through equities – dividend, bonus, rights, and capital appreciation. Further, there are various costs associated with equity investing –
Step 1: Arrive At The Total Purchase Cost
When you purchase your shares, you must make a note of the cost of the shares and the number of shares that you have purchased.
Step 2: Account For All The Corporate Actions
While holding on to shares, you may receive:
a. Dividend
b. Bonus shares
c. Rights
Step 3: Selling The Shares.
At the time of selling your shares, you have to bear brokerage, Securities Transaction Tax (STT), stamp duty, service tax, and turnover tax. This will reduce sale proceeds…
Step 4: Impact Of The Holding Period.
The gains that you make on your equity and stock investment are termed as ‘capital gains’ and attract tax depending on the investment term…
Step 5: The Tax Liability
If the gains are short-term, you will have a tax liability of 16.995 percent of the gains (inclusive of surcharge and education cess 3 percent)…
Step 6: Absolute And Annualised Returns
Absolute returns are returns wherein the investment term is not taken into account.
It also pays to consider absolute and annualized returns for the purpose of computation of your total returns.