What is Tax Loss Harvesting?
Tax loss harvesting is a tax optimization strategy where you sell investments at a loss to offset capital gains or up to ₹3 lakh of ordinary income. This reduces your overall tax liability.
When to Harvest Losses
The best time to harvest losses is before year-end (March 31 in India) or when you have large capital gains to offset. It's especially useful in bear markets or during portfolio rebalancing.
Long-term vs Short-term Losses
In India, long-term capital loss (>1 year) can only offset long-term capital gains. Short-term losses can offset either short-term or long-term gains. Use this strategically.
Wash Sale Rule
After harvesting a loss, don't buy the same security within 30 days before or after the sale. Instead, buy a similar but different security to maintain your investment position.
Tax-Loss Harvesting Strategy
Ideal steps: 1) Identify underperforming positions, 2) Sell at a loss, 3) Immediately buy a similar alternative, 4) Offset gains, 5) Reinvest proceeds in 30+ days if desired.
Limitations
Losses cannot be carried forward indefinitely in India. Use them in the current financial year. Also, ensure you maintain your desired asset allocation while harvesting losses.
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The figures provided by this calculator are estimates based on the inputs you provide and standard financial formulas. STOCKCALC.IN does not offer investment advice. Please consult a qualified financial advisor before making any investment decisions.