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Mar 06, 2025
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Tax harvesting to rescue equity investors: How loss from equities could help you save more tax
When it comes to paying taxes on equities you are liable to pay income tax only when you sell your holdings. While you need to pay taxes on your gains, you also get an opportunity to save taxes in case you incur losses. Short-term capital loss on selling equities can be adjusted against any short-term or long-term capital gains on selling equities. When it comes to long-term capital loss it can be adjusted only against long-term capital gain on equities. You are also allowed to carry over the losses for future years.
This method, which is called tax harvesting method allows individual taxpayers to not pay capital gains tax on their equity shares and mutual funds. However, this method can only be effectively used only if you have long term capital gains (LTCG) on equities up to Rs 1.25 lakh or have any significant loss from equities.
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