AMA: Tax Loss Harvesting

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23

@Bharti_Vasvani @Hem_Shah if you can help here.

24

Hello @Vijay_Sharma,

As of now, there are no rules/ regulations in place for/ against Tax Loss Harvesting in India. If an ITR is taken up for scrutiny at that time all information reported can be questioned by the IT authorities including stocks sold and bought, Incomes etc

Hope this helps!

25

Thank you for the clarification.

26

Tax loss harvesting does not imply that you have permanently sold a stock. There are two primary methods to consider tax loss harvesting.

  1. Family Account Strategy: You can sell a stock in your account and then buy the same stock in one of your family members’ accounts at the same price, especially if you manage a combined portfolio. For instance, if you sell the stock in your account and your spouse can buy the same stock, the stock remains in your family’s hands. When the price increases, your spouse can sell them at higher price . This strategy does not have price risk.

  2. Fresh Purchase Strategy: You can buy the same stock again in the same quantity the next day. This means that your holding will be counted as a fresh purchase. However, this method can lead to either a loss or a profit of the following day. For example, if I sold a Tata Steel share today for Rs 145, I might buy it back tomorrow when the price could be Rs 150 or Rs 140. If the price goes down to Rs 140, I would make profit of Rs 5; if it rises to Rs 150, I would incur loss of Rs 5. If the price remains the same, there would be no gain or loss.

Lastly, please remember that tax loss harvesting involves both side brokerage fees and the Securities Transaction Tax (STT) as well as demat charges. Keep this in mind while planning your tax harvesting transactions.

Ram Agrawal

27

Hi,

I have unrealised gains on my long term equity portfolio. If I sell part of my stock on NSE and buy it immediately on BSE, can I claim the LTCG exemption upto 1.25 lakhs ?

28

Hi @Ankur_Jain1

Yes, Long Term capital gains are exempt up to 1.25 Lakhs in a Financial Year. Therefore, if you sale out your long-term holdings, then long term capital gains upto 1.25 Lakhs shall not be taxable. Hope this clarifies! Reach me out on instagram @fintaxsnippets in case of any concerns.

Thanks,
Pulkit

29

My query is - When option contract is exercised on Expiry day, we need to give physical delivery of stocks from our Demat Holding to broker for physical settlement. Is giving physical delivery of stocks consider as Capital income (STCG/LTCG) or F&O income?
As Giving physical delivery from Demat Holding is considered as “Sale of stocks”.
So, is it needed to report in ITR as Capital income or F&O income ?