Tax-Loss Harvesting Optimizer
India-specific tool to minimize your capital gains tax. Analyzes your portfolio and suggests strategies to save thousands in STCG/LTCG taxes while staying compliant with tax rules.
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Add your stock holdings to see current tax liability and discover optimization strategies to minimize capital gains tax.
What is Tax-Loss Harvesting?
Tax-loss harvesting is a strategy where you sell losing investments to offset capital gains, reducing your tax liability. In India, this is particularly powerful because you can offset short-term capital losses against both short-term and long-term capital gains.
How This Tool Works
- Add your stock holdings with purchase details
- Enter current market prices
- The tool calculates your STCG and LTCG tax liability
- Get personalized optimization strategies
- See potential tax savings from each strategy
Indian Tax Rules (FY 2025-26)
Short-Term Capital Gains (STCG)
- Holding Period: ≤365 days for listed equity
- Tax Rate: 20% (as of FY 2025-26)
- Exemption: None
- Offset: Can be offset by any capital losses
Long-Term Capital Gains (LTCG)
- Holding Period:>365 days for listed equity
- Tax Rate: 12.5% (as of FY 2025-26)
- Exemption: First ₹1,25,000 per FY is tax-free
- Offset: Can be offset by LTCG losses only
Common Tax Optimization Strategies
1. Harvest Short-Term Losses
Sell losing stocks held for less than 365 days to book losses. These losses can offset STCG gains taxed at 20%. This is the most common and effective strategy.
2. Wait for LTCG Treatment
If you have gains on stocks held for 335-365 days, waiting a few more days can reduce tax from 20% (STCG) to 12.5% (LTCG) plus you get the ₹1.25L exemption.
3. Use LTCG Exemption
The first ₹1,25,000 of LTCG is tax-free every financial year. Plan your exits to fully utilize this exemption across years.
4. Carryforward Losses
Capital losses can be carried forward for 8 years. File your ITR even if you have no tax due to preserve these losses for future offsetting.
Wash Sale Rule in India
Unlike the US, India doesn't have a clearly defined wash sale rule. However, tax authorities may disallow losses if you:
- Sell and immediately repurchase the same stock
- Create a pattern of artificial loss booking
- Transfer to family members' accounts (clubbing provisions may apply)
Best Practice: Wait 31 days before repurchasing to avoid scrutiny.
Why This Tool is Unique
No other Indian investment platform offers tax optimization tools. Moneycontrol, Groww, Zerodha, and ET Money focus on execution, not tax planning. This tool fills that gap by:
- Calculating exact STCG/LTCG based on holding period
- Identifying specific stocks to sell for maximum savings
- Accounting for the ₹1.25L LTCG exemption
- Providing actionable strategies ranked by savings potential
- Educating about wash sale rules and compliance
When to Use Tax-Loss Harvesting
- End of financial year: Before March 31 to utilize current year's exemption
- Large gains realized: When you've already booked significant profits
- Portfolio rebalancing: When exiting positions anyway
- Market corrections: When multiple holdings are in loss
Important Considerations
- Don't let tax tail wag the investment dog - fundamentals matter most
- Consider transaction costs (brokerage, STT, stamp duty)
- Account for impact cost on illiquid stocks
- Maintain proper documentation for ITR filing
- Consult a CA for complex situations
Frequently Asked Questions
Can I buy back the same stock after selling for loss?
Yes, but wait 31 days to be safe from wash sale scrutiny. Alternatively, buy a similar stock in the same sector to maintain market exposure.
Do I need to pay advance tax on capital gains?
Yes, if your tax liability exceeds ₹10,000. Advance tax is due in four installments: June 15, Sept 15, Dec 15, and March 15.
What if I have carried forward losses from previous years?
You can use carried forward losses to offset current year gains. Make sure you filed ITR in the year of loss to preserve the carryforward.