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Tax Harvesting: A Strategic Approach Tax harvesting involves strategically selling investments to realize gains or losses, thereby managing the tax liability. This strategy can be particularly beneficial towards the end of the financial year when investors can assess their portfolio performance and
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Tax harvesting is a strategic approach where investors sell investments to realise capital gains or losses, which helps in managing their tax liability.
You can realise long-term capital gains up to an exemption limit of ₹1.25 lakh without incurring any tax liability. Any gains above this limit can be deferred to the next financial year.
Capital losses, both short-term and long-term, can be set off against capital gains. Long-term capital losses can only offset long-term capital gains, while short-term capital losses can offset both short-term and long-term capital gains, thereby reducing your tax bill.
After realising gains or losses, it's crucial to reinvest the proceeds to continue your portfolio's growth. Periodic review and rebalancing of your portfolio are also recommended to ensure it aligns with your investment objectives and risk tolerance.
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