Tax-Loss Harvesting & ₹1.25L Exemption Calculator 2026

Calculate Long-Term (12.5%), Short-Term (20%) Capital Gains Tax & Tax-Loss Harvesting strategies for Indian mutual funds & stocks.

Portfolio Gains & Losses Simulator

FY 2026-27

Unrealized Long-Term Gains (LTCG in Portfolio)

₹

₹0₹20.00 L

Already Realized LTCG This Financial Year

₹

₹0₹5.00 L

Unrealized Short-Term Losses (STCL in Portfolio)

₹

₹0₹10.00 L

Already Realized Short-Term Gains (STCG This FY)

₹

₹0₹10.00 L

Unrealized Long-Term Losses (LTCL in Portfolio)

₹

₹0₹10.00 L

Other taxable income (yearly)

₹

₹0₹5.00 Cr

Tax regime

100% Legal Exemption

Total Potential Tax Saved: ₹17,940; By harvesting up to ₹90,000 of tax-free LTCG and booking eligible loss offsets before March 31.

Remaining ₹1.25L Limit: ₹90,000
Tax-Free LTCG to Sell: ₹90,000

Recommended Action Plan for March 31

Sell ₹90,000 of unrealized LTCG before March 31 to utilize your ₹1,25,000 annual tax-free window and reset your cost of acquisition.
Book ₹30,000 in short-term losses to offset realized capital gains and save ₹6,240 in tax.

Tax Harvesting & Offset Ledger

Optimization Step	Amount (₹)	Tax Saved (₹)	Section / Mechanism
1. Tax-Free LTCG Exemption HarvestSec 112A annual ₹1,25,000 window; 12.5% + surcharge + 4% cess avoided later	₹90,000	+ ₹11,700	Sec 112A annual ₹1,25,000 window; 12.5% + surcharge + 4% cess avoided later
2. STCL Set-Off Against Realized STCGSec 70(2) STCL offsets STCG (20% + surcharge + 4% cess)	₹30,000	+ ₹6,240	Sec 70(2) STCL offsets STCG (20% + surcharge + 4% cess)
3. STCL Set-Off Against Taxable LTCGSec 70(2) unabsorbed STCL offsets LTCG	₹0	+ ₹0	Sec 70(2) unabsorbed STCL offsets LTCG
4. LTCL Set-Off Against Taxable LTCGSec 70(3) LTCL offsets taxable LTCG only	₹0	+ ₹0	Sec 70(3) LTCL offsets taxable LTCG only
Net Overall Tax BenefitDirect cash kept in your investment portfolio	—	₹17,940	Direct cash kept in your investment portfolio

Tax Liability Comparison Before vs After Harvesting

Tax on this year's gains before and after the plan. The total saved also counts tax avoided later on harvested gains, so it can exceed the fall in this year's tax.

Tax Formulas

Standard Formula

Saved = H later − H now + (tax before − tax after the set-offs A, B, L)

Live Calculation (Plugging Your Values)

1. Tax-Free LTCG Exemption Harvest (H):₹90,000

2. STCL Set-Off Against Realized STCG (A):₹30,000

3. STCL Set-Off Against Taxable LTCG (B):₹0

4. LTCL Set-Off Against Taxable LTCG (L):₹0

Substituted Equation:

₹11,700 + ₹6,240 + ₹0 + ₹0 = ₹17,940

Total Potential Tax Saved:₹17,940

Each term is worked out as the tax your gains add on top of your other income, so the surcharge, unused basic exemption and the 87A rebate are counted. H is long-term gain booked inside the unused ₹1,25,000 exemption: the saving is the tax it would cost in a later year with no exemption left, less any tax booking it costs now. A is short-term loss set off against short-term gains; B and L are short- and long-term losses set off against long-term gains above the exemption. At most incomes each term is the amount × 12.5% or 20% × 1.04.

About Capital Gains Tax on Mutual Funds & Stocks (Budget Rules)

Capital Gains Tax applies when you sell listed equity shares or equity-oriented mutual funds at a profit. Under revised regulatory guidelines:

Long-Term Capital Gains (LTCG — Section 112A): Applies when equity investments are held for more than 12 months. Taxed at 12.5% on gains exceeding ₹1.25 Lakhs per financial year.
Short-Term Capital Gains (STCG — Section 111A): Applies when equity investments are held for 12 months or less. Taxed at 20% on the gain.
Tax-Loss Harvesting: An effective strategy where you sell profitable equity investments up to ₹1.25L before March 31 to utilize your zero-tax limit and immediately repurchase to reset your cost base.

Authoritative References

How these numbers are checked →

Tax Loss Harvesting FAQs

What is tax loss harvesting in India?

Selling holdings that are in loss before 31 March to book a capital loss, then setting that loss against your realised gains for the year. It lowers the tax bill without changing your asset allocation if you buy back a similar exposure.

How does harvesting the ₹1.25 lakh LTCG exemption work?

Sell units with unrealised long-term gains of up to ₹1,25,000 before 31 March and buy them back. The gain sits inside the exemption, so it usually costs nothing (unless it lifts your total income past the ₹12 lakh 87A limit or a surcharge threshold, which the calculator checks), and your cost of acquisition resets higher — reducing the taxable gain on the eventual real sale.

Is tax loss harvesting legal in India?

Yes. India has no wash-sale rule, so selling and repurchasing the same security is permitted and routinely done. Keep proper contract notes, and be aware that repurchase carries genuine market risk if the price moves between the two trades.

What are the practical limits on harvesting?

Losses must be realised by 31 March to count for that year. Set-off order is fixed by law: STCL against STCG and LTCG, LTCL only against LTCG. Brokerage, STT and the bid-ask spread are real costs, so harvesting a small loss can cost more than it saves.

Could selling and buying back the same stock be treated as tax avoidance?

Indian law has no wash-sale rule for equities, so selling and repurchasing the same scrip is permitted and the loss is allowed. The risk is a GAAR challenge under Chapter X-A where the arrangement lacks commercial substance, though GAAR applies only where the tax benefit exceeds Rs 3 crore. To stay clean, book the trades at real market prices on the exchange, keep the contract notes, and avoid same-day off-market transfers between your own family accounts.

How do I carry forward a capital loss to next year?

You must file your return by the section 139(1) due date, normally 31 July for salaried taxpayers, and report the loss in Schedule CG and Schedule CFL. A belated return kills the carry-forward permanently, even by a single day. Once carried forward, short-term losses can be set off against both short-term and long-term gains for eight assessment years, while long-term losses can only be set off against long-term gains.

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