Tax Loss Harvesting Calculator

What is Tax Loss Harvesting?

Tax loss harvesting is the strategy of selling securities at a loss to offset a capital gains tax liability. This strategy is typically used to limit the recognition of short-term capital gains, which are taxed at a higher rate (20% as of Budget 2024) compared to long-term gains.

Income Tax Rules for Set-off in India

• Short Term Capital Loss (STCL): Can be set off against both STCG and LTCG.
• Long Term Capital Loss (LTCL): Can only be set off against Long Term Capital Gains (LTCG).
• Carry Forward: If you cannot set off the entire loss in the current year, you can carry it forward for up to 8 assessment years.

How it Works

If you have realized a profit of ₹1,00,000 this year, your tax (STCG) would be ₹20,000. If you have another stock in your portfolio that is currently at a loss of ₹40,000, you can sell it to "realize" that loss. Your net taxable gain becomes ₹60,000, and your tax reduces to ₹12,000—saving you ₹8,000 instantly.