Answer

1. F

   Facts

   Section 198, Income-tax Act 2025 (old Sec 112A) gives you ₹1.25 lakh of equity LTCG tax-free every year. Most investors let this exemption expire unused. Tax harvesting: sell and rebuy on the same day. You reset your cost basis, book the exempt gain, and stay invested. Repeat every year.

2. P

   Provisions and law

   • Sec 198 (old 112A)
   • No wash sale rule
   • Sec 11 (old 10(38))
3. A

   Analysis

   The annual saving: ₹1,25,000 exempt × 12.5% tax rate = ₹15,625 saved every year. Spouse does the same = ₹31,250/year. Over 20 years = ₹3.1L+ tax saving (excluding growth on saved tax). How to do it (same day, same fund): In February or March: sell units with > 12 months holding equal to ₹1.25L gain. Immediately rebuy same fund same day. Net transaction cost = 2× exit load (usually 0 on equity after 1 year) + 2× STT (0.1% each). Cost ≈ ₹250 on ₹1.25L. Tax saving: ₹15,625. Net gain: ₹15,375. When NOT to harvest: If holding period is less than 12 months → STCG at 20%. Harvesting STCG makes it worse. Only harvest LTCG (held > 12 months). Joint account tip: Sell in spouse's account too. Each gets ₹1.25L exemption separately. Total ₹2.5L exempt = ₹31,250 saved per year.

4. C

   Conclusion

   1. 1Identify holdings with LTCG (held > 12 months): check MF statement for purchase dates
   2. 2Calculate LTCG: (current NAV − average buy price) × units
   3. 3If LTCG < ₹1.25L: sell all of those units (full exemption unused)
   4. 4If LTCG > ₹1.25L: sell enough units to book exactly ₹1.25L gain
   5. 5Rebuy the same fund units on the same day, new cost basis = today's NAV
   6. 6Repeat in spouse's account for additional ₹1.25L exemption

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