Card 2 | 2W Rebalance Tax Math

RupeeCase

Education . Tax . 2 of 3

Rs 10 lakh corpus . one year . pre vs post tax

The slower strategy pays less tax. And keeps less money.

Same starting capital. Two cadences. Apply each rate to its own gain, not to the other strategy's gain. The cheque at the end is the only number that matters.

Cadence

Gross CAGRillustrative

Tax dragpp per year

Net after taxon Rs 10L

1Y buy and holdNifty 50 TRI . LTCG 12.5 percent

14.00%

1.75 pp

Rs 11.23 L

2W systematic rebalanceLarge Midcap . STCG 20 percent

40.85%

5.00 pp

Rs 13.59 L

Higher tax rate

+60%

STCG 20 vs LTCG 12.5. The 2W cadence pays the bigger bracket on every cycle.

Bigger after-tax cheque

+Rs 2.36 L

Higher gross return clears the higher drag and still hands more rupees to the bank account.

The arithmetic

A 60 percent higher tax rate loses to a 192 percent higher gross return. The tax taxes the gain. It does not punish the rebalance.