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What is tax harvesting, how to save tax in mutual funds — complete Hindi guide.
Published by The Retail Trader · AUG 18, 2026 · Features
What is tax harvesting, how to save tax in mutual funds — complete Hindi guide.
Tax harvesting means booking capital losses so that capital gains are offset and taxes are reduced.
Simple definition: > Tax harvesting = Offsetting the gains of profitable stocks by selling loss making stocks. Tax is saved.
Keep these six points in mind:
• Stock A: ₹50,000 profit (on booking)
• Stock B: ₹30,000 loss (on booking)
• Net gain: ₹20,000
• Tax: Will be applicable on ₹20,000 (not on ₹50,000)
• Loss carry forward: Can be used for next 8 years
Keep these two points in mind:
• < 1 year — Type: STCG, Tax Rate: 20%
• > 1 year — Type: LTCG, Tax Rate: 12.5% above ₹1.25 lakh
Look at the losing stocks in the portfolio.
Sell loss making stocks. There will be realized loss.
Subtract the losses from the gains of profitable stocks.
Tax will be levied only on net gain.
Keep these four points in mind:
• Reliance — +₹1,00,000
• TCS — +₹50,000
• Infosys — -₹30,000
• Wipro — -₹20,000
Without harvesting: Tax on ₹1,50,000 With harvesting: Tax on ₹1,00,000 (₹1.5L - ₹50K loss)
After booking loss, you can buy back the same stock. No wash sale rule in India.
Unused loss can be carried forward for next 8 years.
Set Off Rules:
• Equity loss → set off from Equity gains
• Equity loss → Cannot be set off from salary income
Keep these points in mind:
• 📌 TAX HARVESTING
• WHAT IS IT:
• 📊 Loss booking to offset gains
• 📊 Tax is less
• HOW IT WORKS:
• 📊 Sell loss making stocks
• 📊Offset profits from wales gains
• 📊 Tax only on net gain
• EQUITY TAX:
• 📊 STCG (< 1 year): 20%
• 📊 LTCG (> 1 year): 12.5% above ₹1.25L
• RULES:
• ✅ You can buy back the same stock
• ✅ Loss carry forward: 8 years
• ✅ Equity loss → set off from Equity gains
• ❌ Equity loss → Not set off from salary
• BEST TIME:
• 📊 In March (financial year end)
• 📊 When realized gains are too high
Keep these points in mind:
• Capital Gains Tax Guide | Mutual Fund Types | Financial Planning
The Retail Trader — educational market analysis. Not investment advice.
This article is for educational purposes only. It is not a buy or sell recommendation, a claim of guaranteed returns, or advisory guidance. Exchanges, SEBI and RBI change rules, rates and procedures from time to time, so verify every figure with your broker or an official source.