Tax Loss Harvesting Calculator
Find out exactly how much tax you can save by strategically booking capital losses to offset your gains. Built for FY 2025-26 Indian tax rules.
What is Tax Loss Harvesting?
Tax loss harvesting is a strategy where you intentionally sell investments that are showing a loss in order to offset the capital gains you have realised elsewhere in your portfolio. By reducing your net taxable capital gain, you lower your overall tax bill for the financial year — without necessarily changing your long-term investment thesis.
For example, if you have realised ₹2 lakh in long-term capital gains from selling a mutual fund, but you also hold shares currently sitting at a ₹50,000 unrealised loss, selling those loss-making shares allows you to bring your net taxable LTCG down to ₹1.5 lakh — saving you real money in taxes. Any losses that cannot be adjusted in the current year can be carried forward for up to 8 financial years.
FY 2025-26 Capital Gains Tax Rates
| Asset Type | Holding Period | Tax Rate |
|---|---|---|
| Equity / Equity MF | > 1 year (LTCG) | 12.5% on gains above ₹1.25 lakh |
| Equity / Equity MF | ≤ 1 year (STCG) | 20% |
| Debt / Other | > 3 years (LTCG) | Slab rate |
| Debt / Other | ≤ 3 years (STCG) | Slab rate |
Loss Offset Rules
- Short-Term Capital Losses (STCL) can offset both Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG).
- Long-Term Capital Losses (LTCL) can only offset Long-Term Capital Gains (LTCG) — they cannot be used against STCG.
- Unabsorbed capital losses can be carried forward for 8 assessment years, provided you file your ITR on time.
- Intra-head adjustment happens first; inter-head adjustment is not allowed for capital losses (they cannot offset salary, business income, etc.).
Frequently Asked Questions
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Tax loss harvesting means intentionally selling investments that are at a loss to offset capital gains you have realised elsewhere in your portfolio. This reduces your overall tax liability. The harvested loss can offset both short-term and long-term gains (subject to STCL/LTCL offset rules), and any unadjusted loss can be carried forward for 8 years.
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There is no explicit "wash sale" rule in India like in the US. However, if you sell a stock to book a loss and immediately rebuy it at the same price, the tax department could treat this as a sham transaction with no economic substance. It is advisable to wait at least 30 days or invest in a similar (but not identical) instrument — for example, sell one Nifty 50 index fund and buy another tracking the same index.
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Yes. Short-Term Capital Losses (STCL) can be used to offset both Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG). However, Long-Term Capital Losses (LTCL) can only be used to offset Long-Term Capital Gains (LTCG) — they cannot offset STCG.
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Capital losses can be carried forward for 8 assessment years (financial years). However, you must file your Income Tax Return (ITR) on time to be eligible to carry forward losses. Failing to file on time forfeits your right to carry forward the loss.
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Yes. Tax loss harvesting works for both direct equity and mutual funds. For equity mutual funds, LTCG applies after 1 year of holding (taxed at 12.5% above ₹1.25 lakh), and STCG at 20%. For debt funds, gains are taxed at slab rate regardless of holding period (post-April 2023 rules). You can harvest losses in underperforming funds and switch to similar funds to maintain exposure.