Tax Calculator
Equity Tax Harvesting Calculator
Long-term gains on equity are exempt up to a limit every financial year. Booking that much gain annually, and reinvesting, lowers the tax you pay when you finally exit. See what it is worth on your holding.
Your equity holding
Units held more than 12 months, where gains qualify as long-term.
Cess of 4% is added to the tax. Surcharge is not modelled.
- Unrealised gain today
- ₹0
- You can harvest this year
- ₹0
- Value if you never harvest
- ₹0
- Value if you harvest yearly
- ₹0
- Exit tax without harvesting
- ₹0
- Exit tax after harvesting
- ₹0
Year by year
| Year | Value | Gain harvested | Cost basis after | Tax saved |
|---|
Capital gains tax when you exit
- Taxable gain at exit₹0
- Exemptions used1
- In hand after tax₹0
- Taxable gain at exit₹0
- Exemptions used1
- In hand after tax₹0
How harvesting works, and what it costs you
The mechanic
Long-term gains on equity funds and shares are exempt up to ₹1.25 lakh each financial year. Sell enough units to book a gain up to that limit, pay nothing, and buy back in. Your cost basis steps up, so the gain you eventually pay tax on is smaller.
One limit, not one per fund
The exemption applies once per person per year across all equity holdings combined. If you have already booked gains elsewhere this year, only the balance is available.
Units must be 12 months old
Only units held more than a year qualify as long-term. Selling newer units books a short-term gain taxed at 20%, which defeats the purpose. Repurchased units start a fresh 12-month clock.
The frictions
Exit load if the scheme charges one, STT and stamp duty on the transaction, and one or two days out of the market between redemption and repurchase. Check the exit load before you start.
No fee, no obligation
Talk to our team before 31 March
Leave your details and we will call you back to go through your holdings, show you which units qualify, and handle the redemption and reinvestment paperwork if you decide to go ahead.
- A unit-level view of which purchases have crossed 12 months and what gain each carries
- Exit load and scheme terms checked before anything is redeemed
- Capital gains statements for your records and your tax advisor
Wealth North is an AMFI-registered mutual fund distributor (ARN-XXXXX). We are remunerated by commission from the asset management companies whose schemes we distribute, as disclosed in the scheme documents. We do not charge you a fee.
Note: Educational estimate only, based on the inputs and return assumption you enter. Returns shown are illustrative, not guaranteed, and actual outcomes will differ. The calculation assumes all units qualify as long-term, that the exemption is available in full each year, and ignores exit load, STT, stamp duty and the days out of market between redemption and repurchase. Tax rules and limits can change. Wealth North is an AMFI-registered mutual fund distributor, not a tax advisor. Mutual fund investments are subject to market risk; read all scheme related documents carefully. Please consult your tax advisor before acting.
Guide
Tax Harvesting in India: How It Works
How gain and loss harvesting work on equity mutual funds and shares, what the annual exemption is worth over time, the costs that eat into it, the set-off and carry-forward rules for losses, and when the technique is not worth using.
Updated for FY 2026-27.
Long-term capital gains on equity mutual funds and listed shares are exempt up to ₹1.25 lakh per person per financial year. Gains above that are taxed at 12.5%. Short-term gains, on units held 12 months or less, are taxed at 20%. The exemption does not carry forward — unused, it is gone on 1 April.
What tax harvesting actually is
Tax harvesting means deliberately booking a gain or a loss before the financial year ends, purely for the tax effect, and then getting back into the same position. Two separate techniques go by the name:
- Gain harvesting: selling units to book a long-term gain within the ₹1.25 lakh exemption, paying nothing, and buying back. Your cost basis resets higher, so the gain you eventually pay tax on is smaller.
- Loss harvesting: selling a holding that is underwater to book the loss, then using it to offset gains elsewhere in the same year. Any unused loss carries forward for eight years.
Gain harvesting is the one most investors can use every year regardless of how markets behaved. Loss harvesting only helps when something in the portfolio is actually down.
Gain harvesting, step by step
- Find the units that have crossed 12 months. Only those produce long-term gains. Your capital gains statement from the AMC or RTA shows purchase dates and gains per lot.
- Work out the gain already booked this year across every equity fund and share. The ₹1.25 lakh limit is one number per person, not one per scheme.
- Redeem enough units to book the remaining headroom. Note that you redeem an amount, but what counts is the gain inside it. On units that have doubled, a ₹2.5 lakh redemption carries about ₹1.25 lakh of gain.
- Reinvest the proceeds, usually the next working day. Your new units carry a higher cost and a fresh 12-month clock.
- Keep the statements. The gain still has to be reported in your return even though the tax on it is nil.
What it is worth, and what it is not
Harvesting does not create returns. It moves tax from later to never, on the slice of gain that fits inside the exemption each year. Over a long holding period that adds up: using the exemption ten times instead of once can shelter over ₹12 lakh of gains, worth roughly ₹1.6 lakh in tax at 12.5% plus cess.
But the benefit is capped and slow. It will not rescue a poor fund choice, and it is not a reason to sell something you would otherwise hold. Treat it as housekeeping, not strategy.
The costs people forget
| Cost | What to check |
|---|---|
| Exit load | Many equity schemes charge around 1% if units are redeemed within a year. Long-held units are usually past it, but confirm per scheme before redeeming. |
| Days out of the market | Redemption proceeds take a day or two to arrive. A sharp move in between can cost more than the tax saved. |
| STT and stamp duty | Small, but they apply on both the redemption and the fresh purchase. |
| A new 12-month clock | Repurchased units are short-term again. If you might need the money within a year, you have converted a long-term gain into a potential short-term one taxed at 20%. |
| ELSS lock-in | Units in a tax-saving fund cannot be redeemed until three years from each purchase, so they cannot be harvested before that. |
Loss harvesting and the set-off rules
Where a holding is below cost, booking the loss creates something useful. How it can be used depends on the type:
- A short-term capital loss can be set off against both short-term and long-term capital gains.
- A long-term capital loss can be set off only against long-term capital gains.
- Unused losses carry forward for eight assessment years, but only if you file your return by the due date. Miss the deadline and the carry-forward is lost.
- Capital losses cannot be set off against salary or most other income. They stay within the capital gains head.
India has no wash-sale rule of the kind seen in the United States, so repurchasing the same fund is not disallowed. That said, a pattern of selling and instantly rebuying purely for tax effect is worth discussing with your tax advisor if the amounts are large.
Sequencing when you hold several funds
With one exemption and several schemes, which to harvest from matters a little:
- Start with units carrying the largest gain per rupee redeemed. You use up less of the holding to fill the same exemption, which keeps transaction costs and time out of the market down.
- Avoid funds where an exit load still applies, or where you are close to needing the money.
- Leave ELSS units still inside their three-year lock-in alone; they are not redeemable.
- If you are also harvesting losses, book those first — they change how much gain you can absorb tax-free.
Timing within the year
Redemption and reinvestment take a few working days, and the last week of March is crowded. Aim to complete harvesting by mid-March. A transaction that settles into the next financial year counts against the wrong year's exemption, which defeats the exercise entirely.
Some investors harvest earlier in the year instead, accepting that a later market fall might have offered a larger gain to book. There is no way to know in advance; the practical answer is to pick a date you will actually act on.
Who this does not help
- Investors whose total equity gains stay below the exemption anyway. There is nothing to shelter.
- Holdings inside NPS, EPF or insurance policies, which are taxed under their own rules.
- Debt fund investors. Gains on debt funds bought after 1 April 2023 are taxed at slab rates with no LTCG exemption, so this technique does not apply.
- Anyone who would breach a lock-in or trigger an exit load larger than the tax saved.
Common questions
Does the exemption apply per fund or per person? Per person, per financial year, across all equity mutual funds and listed shares combined.
Can my spouse and I each use it? Yes, if the units are genuinely held in each name and funded from that person's own money. Clubbing provisions can apply where one spouse gifts money to the other to invest.
Do I have to report a gain if the tax is nil? Yes. The gain is disclosed in your return; the exemption is applied there.
Is there a minimum holding after I buy back? No rule requires one, but the new units need 12 months before they qualify as long-term again.
Can I harvest in a SIP? Yes, though each instalment is a separate lot with its own purchase date. Only instalments older than 12 months qualify, which makes a capital gains statement essential.