Kaushik explains how wealthy use asset-backed loans to avoid capital gains tax
Updated
Updated · The Economic Times · May 9
Kaushik explains how wealthy use asset-backed loans to avoid capital gains tax
4 articles · Updated · The Economic Times · May 9
He said selling investments can trigger 12.5%-20% capital gains tax, while loans against stocks or property typically cost about 9%-10% interest.
Borrowing against assets lets investors raise cash for business expansion, reinvestment or liquidity needs without selling holdings, allowing underlying shares or property to keep compounding.
Kaushik said the strategy suits people with strong assets, stable cash flow and repayment discipline, warning that poorly planned debt can quickly become a financial burden.
If the wealthy can borrow to avoid taxes, does this strategy challenge the fundamental fairness of capital gains taxation?
With India's new 2025 tax act now in effect, what legal loopholes for this debt strategy have been closed or opened?
As markets fluctuate, how can wealthy investors avoid a catastrophic margin call when borrowing against their portfolios?