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Setting off a loss against a gain, and its rules
Published by The Retail Trader · JUL 25, 2026 · Features
Some positions in a portfolio are at a loss and some are in profit. Booking those losses and setting them off against gains is legitimate planning, not a loophole.
Capital losses made within a year can be set off against capital gains of the same year, with certain rules on which loss can go against which gain.
A loss that is not set off that year can often be carried forward — but for that, it is necessary to file the return on time.
These points keep this exercise from going wrong:
• Do this only when that position is worth selling anyway — the tax is the tail, not the dog.
• If you sell and buy back immediately, charges apply both times.
• For carry forward, the return filing timeline matters.
• Rules and limits change — confirm the final calculation only with a CA or an official source.
The biggest benefit is often not tax but cleanup. This exercise forces you to look at positions you had been ignoring for years — and often many of them should have been let go anyway.
This article is educational only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.