Tax Loss Harvesting Calculator
Which losses can offset which gains, in the order that saves the most.
- Long-term loss against long-term gain — its only option
- ₹50,000.00
- Short-term loss against short-term gain, taxed at 20%
- ₹1,50,000.00
- Short-term loss spilling onto long-term gain, taxed at 12.5%
- ₹0.00
- Net short-term gain, taxed at 20%
- ₹1,50,000.00
- Net long-term gain, less the ₹1,25,000.00 exemption
- ₹2,25,000.00
- Tax
- ₹58,125.00
FY 2026-27. A short-term loss may be set against short-term or long-term gains; a long-term loss only against long-term gains. That asymmetry is why the order above matters — the flexible loss should shield the higher rate first. Losses that cannot be used this year carry forward for 8 assessment years, but only if you file your return by the due date: a belated return preserves the current year's set-off and destroys the carry-forward. Capital losses can never be set against salary, house-property or business income. India has no wash-sale rule — selling at a loss and buying the same share back the same day is valid, and the new lot simply starts a fresh holding period. What does restrict harvesting is section 94(7) dividend stripping (buying within three months before a record date and selling within three months after, or nine for units) and section 94(8) bonus stripping, which since AY 2023-24 covers shares as well as units. Neither is modelled above. Finally, the round trip is not free: STT, brokerage, GST on brokerage, stamp duty and the overnight price gap come to roughly 0.2% to 0.3% of the position, so harvest only where the tax saved exceeds that — and remember demat holdings sell FIFO, so a partial sale takes your oldest lots, which may be the long-term ones you did not mean to touch.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
Booking a loss before the financial year ends lets you set it against gains you have already realised, cutting the tax on them. What makes it worth calculating rather than guessing is that the two kinds of loss have different powers: a short-term loss can be set against short-term or long-term gains, while a long-term loss can only touch long-term gains.
That asymmetry decides the order. The flexible loss should shield the higher rate first — short-term equity gains at 20% before long-term ones at 12.5% — and applying it the other way round quietly wastes part of the shield. This calculator applies them in the order that saves the most and shows what the wrong order would have cost.
Unlike the United States, India has no wash-sale rule: selling at a loss and buying the same share back the same day is perfectly valid, and the new lot simply starts a fresh holding period. What does restrict harvesting are the dividend-stripping and bonus-stripping provisions, and the round-trip cost of the trade itself.
Long-term losses against long-term gains only. Short-term losses against short-term gains first, then any remainder against long-term gains. The 1.25 lakh exemption then applies to the net long-term gain that survives.Unused losses carry forward for eight assessment years, keeping their short-term or long-term character, but only if the return is filed by the due date.
Frequently asked questions
Does India have a wash-sale rule?
No. There is no equivalent of the US wash-sale rule, so you may sell a holding at a loss and repurchase it immediately without the loss being disallowed. The repurchased lot starts a fresh holding period at the new cost. What you cannot ignore is the cost of the round trip — STT, brokerage, GST, stamp duty and the price gap between sell and buy come to roughly 0.2% to 0.3% of the position.
What actually restricts loss harvesting in India?
Section 94(7) disallows a loss to the extent of dividend income where you bought within three months before a record date and sold within three months after, or nine months for mutual fund units. Section 94(8) disallows bonus-stripping losses entirely, adding them to the cost of the bonus units instead, and since assessment year 2023-24 it covers shares as well as units. Neither is modelled here.
What happens if I file my return late?
You keep the current year's set-off and lose the carry-forward. Losses can only be carried forward to future years if the return is filed by the due date under section 139(1); a belated return under 139(4) preserves what you set off this year but destroys the balance permanently. For anyone sitting on large unused losses this is an expensive deadline to miss.
Can I set a capital loss against my salary?
No. Capital losses can only be set against capital gains — never against salary, house property, business or other-source income. This is the opposite of how business losses work, and it is why harvesting only helps if you have gains to shelter, either this year or within the eight years the loss can be carried forward.