How to handle concentrated stock positions?

Taxation
1

Greetings,

A stock purchased in 2017 has grown to be worth 24% of my portfolio. I would like to rebalance to reduce the concentrated stock position but am also concerned about the tax consequences of selling it. I am aware that there will be some benefit from the grandfathering clause.

I would like to know if there is any other tax efficient way to reduce risk and transition to a balanced portfolio?

Thanks in advance
AGS

2

Rs. 1.25 Lacks of LTCG is tax free every year. Hope you used it last year and also use it this year. Apart from that you can try tax harvesting where you exit some long-term loss position and buyback after few days (please consult a CA also as sometimes tax dept can flag this).

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3

  1. Systematic Selling to Spread Tax Liability - meaning Sell small portions each financial year, up to ₹1.25 lakh of LTCG, which is tax-free.

  2. If you have booked a loss on any stock/MF, offset it with the gains in these stocks.

  3. Gift - If your spouse or a parent is in a lower tax bracket, maybe try this option …but pls double check before doing it.

  4. See if you can invest the lump sum in an index fund or some other fund and thereby increase the size of your portfolio

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4

If its an fno stock, then you could short it perhaps to cover some of your cash position. Will have to keep doing this on expiry of contract.
You should get some premium, but will need some margin to short, probably can pledge stock for that. I have never done this.