Tax loss harvesting opportunity: 2019-20

Tax loss harvesting opportunity: 2019-20

If you hold stocks or mutual funds in your portfolio that have unrealised losses, you can set off these losses against realised profits on which you have to pay taxes. To do this, you can book the losses, effectively reducing the realised gains and hence also reducing the tax payable. This act of booking unrealised losses is called Tax Loss Harvesting.

Introduction to Taxation

When you invest in the markets, you potentially have two types of taxes —

1.    STCG (Short term capital gains tax) or tax on gains made by selling stocks or Equity MF held for less than 1 year. Taxed at 15% of the gain.

2.    LTCG (Long term capital gains tax) or tax on gains made by selling stocks or Equity MF held for more than 1 year. First Rs 1lks of LTCG is tax-free and taxed at 10% above Rs 1lks of LTCG per year.

Do go through the Markets and Taxation module on Varsity for detailed information on taxation when investing or trading.

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