AMA: Tax Loss Harvesting

AskMeAnything
#1

So the markets are fluctuating. Chances are your portfolio is going up and down!! :thinking:

But did you know, if you have losses, you can “harvest” them?
With Tax Loss Harvesting, you realise your losses and set them off against your realised gains, thereby adjusting the tax liability.

Also, a bonus chance to rebalance your portfolio. :handshake:

Got questions around Tax Loss Harvesting?
Shoot’em, and we will take care of the rest!

To understand more about Tax Loss Harvesting, you can check out our blog. :point_down:

Understand more about setting off and carry forwarding losses here :point_down:

Tax harvesting dought
#2

Hey @TeamQuicko

Can I set off long-term capital losses against short-term capital gains??

Thanks in advance!

#4

Hey Shweta, I believe long-term capital losses cannot be set off against short-term capital gains.

#5

I want to opt for Tax Loss Harvesting to save tax but I still want to hold the stock. What should I do?

#6

I have a Salary Income and I have an unrealized loss from Equity Trading Income. Will Tax Loss Harvesting help me save more on taxes?

#7

Hey @Shweta_Saini

No, You can only set off long-term capital losses against long-term gains. However, you can set off short-term capital losses against both long-term and short-term capital gains.

#8

Hey @riya_gupta

You can opt for Tax Loss Harvesting by selling the existing holdings on which there is an Unrealised Loss. Thus, the loss can be adjusted with realised profit to reduce the tax liability.

However, if you want to continue holding the stock to keep the portfolio unchanged, you can buy the shares again on the next trading day. However, you must ensure that the transaction cost of entering into buy and sell transaction is less than the amount of taxes saved from Tax Loss Harvesting.

Hope this helps!

#9

Hey @TanyaChopra

The loss from equity trading cannot be adjusted with Salary Income. Thus, we would suggest not opting for Tax Loss Harvesting since it would not reduce your tax liability.

#10

I have a Realised Short Term Profit of Rs. 3,00,000. However, there is an Unrealised Long Term Loss of Rs. 1,00,000. Should I opt for Tax Loss Harvesting by selling the shares to realize the loss?

Thanks in advance. :v:

#11

Hi @sushil_verma,

If you opt for Tax Loss Harvesting by selling the shares held for more than a year, it would be a Realised Long Term Capital Loss (LTCL). Additionally, LTCL cannot be set off against STCG (Short Term Capital Gain). Thus, in this case, Tax Loss Harvesting is not beneficial.

Hope this helps :slight_smile:

#13

Tax harvesting dought-i had profit in STCG for yr 2020-2021 and now in yr 2021-22 I had unrealistic loss in my portfolio,can I use this unrealistic loss in yr 2022-22 to save my tax in yr 2020-21,if so please help me

#14

Hey @kishore_varma, you can find out the details related to tax loss harvesting in this article:

#15

Hi

I am writing this to seek your expert advice regarding Tax Harvesting:

Before the end of Fy 2022 ( on 29th March 2022 ), in order to do some tax harvesting, i had sold some securities from my Upstox account and bought the same from the ZERODHA account and vice versa as well.

Now when I am checking my TAX PNL in Zerodha my TAX PNL has been reduced as per the losses that I have booked but at the same time when I am checking my UPSTOX TAX PNL, they are showing the losses booked in the current Finacial Year. In fact, when I checked the other company’s TAX PNL the losses are adjusted in the same financial year but only Upstox is doing differently.

So wanted to understand which is the right away, do we have to consider the sales of securities that are done by all the brokers or UPSTOX that are following the share transfer date or T+2.

BTW Quicko integration is available in both Zerodha and Upstox and calculation is done on basis of the TAX PNL report which makes it confusing as it differ the logic

Thanks

#16

Hi @shubhamwatta, to help you further I have sent a personal message to you. Please respond to it.

#17
#18
#19

The due dates to claim deductions are extended to 30th June 2020 from 31st March. So can I do the tax loss harvesting for FY 2019-20 during April 2020 also?

#20

Hi Sofiyah,

The due dates extension is for compliance due dates for FY 2019-20 and making tax-saving investments. The FY 2020-21 will begin from April 2020 - meaning any Income or loss realized from 1st April 2020 will be considered for FY 2020-21.

Therefore the losses realized for tax-loss harvesting in April 2020 cannot be treated as loss of FY 2019-20.

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Hope this helps:)

#21

is it possible to harvest if I sell my holdings on 31/03/2022 because in my tax P/L ,the loss is coming in FY 2022-23

#22

Hi @Divya_Singhvi / @TeamQuicko ,
I read the following statement on Zerodha’s website regarding tax loss harvesting.
The article suggests that if we sell and buy stocks just for the purpose of booking a loss, this practice may be questioned by the Taxman. Is that really so? Isn’t this provision provided legally to investors?

While there is no explicit regulation in India that disallows tax loss harvesting. In the US, if stocks are sold and bought back within 30 days just to reduce taxes on realized gains, they are called wash sales, and taxes are disallowed to be offset. It is advisable for clients trading and investing in India to consult a Chartered Accountant (CA) while filing income tax returns, as they could potentially be questioned by the income tax authorities during tax scrutiny if the same stock is sold and bought back to save on the taxes

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