Tax-Loss Harvesting — Turn Losses Into Tax Savings

Tax-loss harvesting is a legitimate strategy to lower your tax bill: you sell investments sitting at a loss to book that loss, which can offset taxable capital gains elsewhere.

How it works

Capital losses can be set off against capital gains in the same year — and unused losses can be carried forward (up to 8 years) to offset future gains, if you file your return on time. Booking a ₹50,000 loss can offset ₹50,000 of gains, reducing the tax you pay.

A simple example

If you have ₹1 lakh of short-term gains and also hold a stock down ₹40,000, selling the loser books the loss and cuts your taxable gains to ₹60,000 — a real tax saving.

Things to watch

• Don’t sell a good investment purely for tax — the thesis should still hold.
• Rules differ for short-term vs long-term and across asset types.
• Keep records; report losses in your ITR to carry them forward.

This is general information, not tax advice — rules are detailed and change. Consult a qualified professional before acting.