Zerodha's second demat account to aid tax savings

In a move that will help long-term investors who want to save on capital gains tax while trading, discount broker Zerodha has allowed its users to open a secondary demat account.

- ANANYA GROVER

The basic idea is to manage long-term investment and short-term trade by applying the first-in-first-out (FIFO) option to each account.

Currently, as the FIFO rules apply on a single demat account, if a stock is purchased for long term at a lower price and an investor buys more quantity of the same stock for trading purpose, the short-term profit as well as capital gains tax will be higher as the older purchase will be sold first, impacting long-term returns.