Answer

HNI wealth · HNI Tax

Loss harvesting at HNI scale: setting off lakhs in capital gains

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  1. Facts

    Rules for loss set-off: • LTCG on equity can only be set off against LTCG on equity • STCG on equity can be set off against any capital gains • Capital losses can be carried forward 8 years • Capital losses cannot be set off against ordinary income.

  2. Provisions and law

    • IT Act, Sec 108, 109, 111 (old 70, 71, 74

  3. Analysis

    HNI strategy: If your portfolio has unrealised losses in any position, harvest them before March 31 by selling and repurchasing after 30 days. These losses reduce your capital gains tax. Example: ₹50L LTCG on equity. ₹15L unrealised STCG loss in another position. Harvest the loss → net LTCG = ₹35L → tax = ₹43,750 (12.5% of ₹35L above ₹1.25L exempt) vs ₹59,375 without harvesting. Saving: ₹15,625 per ₹15L harvested.

  4. Conclusion

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Capital loss set-off and carry forward with a timely return, Sec 108, 109, 111, 121 (old 70, 71, 74 and 80)

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