Answer

1. F

   Facts

   The most underused legal tax saving in India. Every April 1, the ₹1.25L LTCG exemption resets. Sell equity MF or shares with up to ₹1.25L unrealised gain, book the profit tax-free, buy back immediately. Cost basis resets to current price. Do this every year: save ₹15,625/year in tax, permanently reduce future tax liability.

2. P

   Provisions and law

   • Sec 198 (old 112A)
   • No wash sale rule
3. A

   Analysis

   Exactly how harvesting works: You hold HDFC Flexi Cap MF SIP since Jan 2022. By Feb 2026 (48 months = 4 years), unrealised LTCG = ₹2.8L. Step 1: Redeem units worth ₹1.25L of LTCG (you don't need to redeem all units, only enough to book ₹1.25L gain). Step 2: Immediately buy back the same amount in the same fund. Step 3: Your new cost basis is today's NAV. Gain booked: ₹1.25L, tax: zero (within exemption). Next year: fresh ₹1.25L exemption available. How much to redeem: Not the full portfolio. Just enough units to realise ₹1.25L of gains. If your average gain is 50% (bought at ₹100, now ₹150): redeem ₹3.75L worth of units → ₹1.25L is gain. Buy back ₹3.75L immediately at ₹150 NAV. Net cash outflow: zero (sell and buy same amount). Transaction costs: exit load (if within 1 year, avoid) + STT on sell (₹0.001% on ₹3.75L = ₹3.75, negligible).

4. C

   Conclusion

   1. 1Check holding period for all equity MF and shares in January: which positions are 12+ months old?
   2. 2Pull unrealised gains statement from broker or CAMS (filter: LTCG only, 12+ months)
   3. 3Calculate: how many units to redeem to book exactly ₹1.25L of LTCG (not more)
   4. 4Verify no exit load on the units being redeemed (held 12+ months → exit load usually nil)
   5. 5Execute redemption, sell selected units on CAMS or directly with fund house
   6. 6Immediately repurchase same amount in same fund at today's NAV

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.