Tax loss harvesting opportunity – FY 19/20

March 18, 2020
Console, Featured, Sticky

Traders,

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.

Tax Loss Harvesting report

We have created a report to help you spot Tax Loss Harvesting opportunities in your account with us. So, if you have realised LTCG or STCG on which you have to pay taxes this financial year, we will list out all your existing holdings that are currently in a loss. You can sell these stocks to book loss to the extent of realised gains, reduce your realised LTCG or STCG, and hence save on taxes that you would have had to otherwise pay.

To access the report, visit Console. Check this example below

Tax Loss Harvesting report on Console

In the above case, the account has Rs 1,08,000 as STCG on which a 15% tax of Rs 16,200 is due to be paid; and LTCG of Rs 9,26,000 on which 10% above Rs 1lk of Rs 82,600 is due. This investor can sell any of the stocks from the list in this report, book the loss, reduce the LTCG/STCG, and save over Rs 98,000 in taxes. The investor would have to make this transaction before March 31, 2020, to harvest losses for FY 19/20.

If you intend to hold these stocks and don’t want to sell them, you can buy the stock back after two days of selling. Two days because that is the settlement cycle when you buy or sell stocks. You can also potentially sell your stock holdings and buy similar stocks in the same sector immediately.

If you intend to partially sell a stock that you hold, bought on multiple days or multiple prices, FIFO (First in First out) is applied to determine the realized loss. So when you sell partially, the realized loss may be different to overall loss that you see on your holdings. Make sure to check the breakdown of your holdings in such cases.

Also as part of our Rainmatter initiative, we have partnered with Quicko to help you file your income tax returns. They have a special offer for Zerodha customers. Click here to know more.

Happy Trading,

Nithin Kamath

CEO @ Zerodha and partnering startups through Rainmatter to help grow and improve the capital market ecosystem in India. Love playing poker, basketball, and guitar. @Nithin0dha on Twitter.

112 comments

  1. Munish says:

    if i have profit STGC in debt mutual funds, can it be adjusted to loss of STCG and LTCG in equity
    if i have profit LTCG in debt mutual funds , can it be adjusted to loss of STCG and LTCG in equity

    • Team Quicko says:

      Hi Munish,

      You can adjust STCL against both i.e, STCG and LTCG irrespective of an asset class. However, you can only set off LTCL against LTCG. Remaining LTCL can be carried forward for 8 years provided you file ITR within due date.

      • Dinesh says:

        Can you confirm if tax loss harvesting can be done in June ? Or should it be done before Mar 31???

      • Zomby says:

        1. For equity is it the case (or makes sense ) that LTCL be set off (or carried forward) if LTCG is >1lakh.
        2. Can LTCL from equity be set off against debt LTCG (before indexation or after)?

  2. Bhaskar S says:

    Hi,

    I am a intraday trader, I buy and sell only CE & PE, never bought stocks c&c or done any futures. I am in loss in options trading, how do I show these loses while filing my taxes?

    • Team Quicko says:

      Hi Bhaskar,

      Losses from Intraday (Speculative) can only be set off against profits from Intraday. However, losses from F&O (Non-Speculative Business Income) can be set off against all other income heads except Salary.

  3. rahul says:

    hello nithin,
    i have received sms from VM-ZRODHA
    “we have noticed SMS messages with link to a page that looks like kite.
    we haven’t sent this . it is a scam. if you are logged in, reset your password immediately”

    What is this i have not logged to kite. i contact customer care, but there was nobody to reply

    kindly reply what is this

    • Daryl says:

      This was sent to all users as a precaution. Someone is trying to fish information using a fake link, hence Zerodha sent out a caution message.

  4. Sharad says:

    What happens if we buy the same stock after 1 day?

    • Shubhankar says:

      Once you sell the stock, the profit/loss is booked. If you buy the same stock next day or any other day, you will have new position, with new purchase price & again when you sell the stock, profit/loss will be calculated as per the new purchase & sale price.

  5. Vinay jain says:

    On 18.03.20 I had traded in hdfcbank in mis. Before market closing all mis positions should be squared off automatically. Why still my positions showing 300 in minus after market closing . Pls clarify

  6. Manush g nakrani says:

    9033898989

  7. Raghavanv V says:

    Should we change the password in Kite even if we use to login using biometric identification?
    Pl clarify (this is regarding latest caution sms from Zerodha)

  8. Kashish says:

    Hi…I made 60 lakhs from the market fall in derivatives trading with the help of Telegram Channel – HQX100

    I have losses in cash investments which i did on my own….Can i set off these losses with derivatives profit ?

  9. ANKUSH says:

    Why is there a major problem in order execution in the condition of highly volatile market?This did happen couple of days back when nifty slashed nearly 1500 points & i tried a dozen of times to execute the orders but my efforts were to no avail.

  10. Lokesh says:

    I have lose on holding shares, someone explain me about Tax Loss Harvesting.

  11. Chandan raj says:

    What is the range of STCG. When tax applied, for how mich earn

  12. AKOJIWAR SANTOSH KUMAR says:

    Sir, I have been investigating in mutual funds. How can I buy in this volatile situation?

  13. Saj says:

    While palcing order in equities , getting errorr client not enabled on product why so ?

  14. mayank pandya says:

    hi i m mayank
    started just 2days in zarodha and my invest below 10k and my holding shar in stcg
    please help me

  15. suhas kadam says:

    some share are soled out without placing order in zerodha Demat Account (selling stock CROMPTON =13 qty, GRANULES=55 qty, INDIAGLYCO =31 qty, MANAPPURAM =55 qty and SBIN =56 qty ) and buy stock SNTCL 4000 qty .
    i have create ticket against this issue but till now not getting any feedback from support. will it recover my shares as it is? plz reply
    thank you

  16. Milind Dixit says:

    I have just created account with Zerodha.Is this the right time to buy shares?My investment limit is 20k-40k?

  17. Leela Gopinath says:

    After Investing more than 60K, faced subsequent loss by holding the shares. How could I make use of Tax Loss Harvesting ?

    • Team Quicko says:

      Leela,

      Tax Loss Harvesting is the practice of selling your loss-making shares and mutual funds before the end of the financial year by converting these unrealised losses into realised loss and in turn, reduces the tax liability.

      You can read methodology and illustrations here: http://bit.ly/33wgNRI

  18. Om jee says:

    Paas ward rong
    Call mi 7206565570

  19. Saravana says:

    I can see my console is showing as
    “Tax-loss harvesting opportunity not found
    You have no realized capital gains and unrealized capital loss”.

    So nothing to do in this case?

    • Team Quicko says:

      Hello Saravana,

      Since you have no realised capital gains and unrealised capital loss, there is no opportunity to realise the loss and adjust it against realised profits. Thus, there is no opportunity for Tax Loss Harvesting. You do not need to do anything in that case.

  20. Sanket says:

    Hello Team
    I have STCL and no STCG in 2019-20 Fin year. Can I book short term losses in Equity and MF and claim it for carry forward. Pl respond quickly as I have to take action before 31 Mar. Thanks

  21. Asheej says:

    For booking STCL/LTCL do we have to sell all of the loss making shares of a particular stock/MF or can it be done by just selling part of it?

    • Team Quicko says:

      Hi Asheej,

      To book the STCL or LTCL, you can sell part of your total holdings. Please note that the amount of loss you can realise would be based on the number of shares actually sold.
      STCL can be adjusted with both LTCG and STCG while LTCL can be adjusted against LTCG only. The remaining loss can be carried forward for 8 years and adjusted against future Capital Gains.

  22. Kasi says:

    Hi,

    Can STCL or LTCL from either equity or equity mutual funds be shown against regular salary income? Or it can be used only against STCG or LTCG?

    Can the loss be shown against an MNC (unlisted in India) giving RSUs to its employees?

    Thanks

    • Team Quicko says:

      Hi Kasi,

      Capital Loss cannot be set off against any income expect Capital Gains. STCL can be adjusted against both STCG and LTCG. LTCL can be adjusted against LTCG only. Neither STCL nor LTCL can be adjusted against Salary Income.
      If the employee sells or transfers the RSU issued to him by the employer, Capital Gains would arise. STCL and LTCL can be adjusted against such Capital Gains based on the above-mentioned rules. Please note that Capital Gains would arise on sale or transfer of RSU and not on the issue of RSU by the employer to the employee.

  23. Kiran says:

    How to claim STCL &LTCL while filling ITR?

    • Team Quicko says:

      Hi Kiran,

      Capital Gains Income or Loss is reported in ITR-2 or ITR-3. You need to enter the details of Sales Value, Purchase Value and expenses in the ITR to compute the Capital Gains or Capital Loss.
      STCL i.e. Short Term Capital Loss can be adjusted against both STCG (Short Term Capital Gain) and LTCG (Long Term Capital Gain). The remaining loss can be carried forward for 8 years.
      LTCL i.e. Long Term Capital Loss can be adjusted against LTCG (Long Term Capital Gain) only. The remaining loss can be carried forward for 8 years.

  24. Kumar says:

    I have STCL from Nifty ETF and profits from stock options and commodity options. Can I offset them?

    • Team Quicko says:

      Hi Kumar,

      Income from trading in Futures and Options is considered to be a Non-Speculative Business Income.
      STCL cannot be set off against any income except STCG and LTCG. Thus, STCL from Nifty ETF cannot be set off against profits from stock options and commodity options. The STCL can be carried forward for 8 years and adjusted against future Capital Gains Income.

      Please note that a Non-Speculative Business Loss can be adjusted against any income except Salary. Thus, loss from options ttrading can be adjusted against STCG, LTCG, IFOS, HP Income etc but not Salary Income.

  25. Vimal says:

    Sir, I am confused about the console report because my financial year f&o only ( option )turnover is 16.30 Lk or profit is only 13.30 k. And equity turnover is 87 k or profit 24 k. So do I have do a tax audit or pay any tax. As per tax slab and according to console my p/l is less. Plz replay

  26. SUBRAHMANYAM says:

    Why am I getting a message that “tax harvesting opportunity not found” though I have a Short term capital gain and long term loss.

    Please clarify if Short term gain can be set off against STCL and/or LTCL

    Please clarify if short term capital loss can be set off against STCG or LTCG

    Thanks

    • Team Quicko says:

      Hi Subrahmanyam,

      STCL can be set off against both STCG and LTCG but LTCL can be set off against LTCG only.
      Since you have a Long Term Capital Loss, it cannot be set off against Short Term Capital Gain. Thus, there is no opportunity for Tax Loss Harvesting. However, you can carry forward the Long Term Capital Loss for 8 years and adjust it against future LTCG.

  27. Jawahar says:

    Hi

    I tried to open zerodha account, my ticket numer is “20200319984494”. But still i’m getting invalid/ no response.

    I send courier and it reaches Zerodha office by 16th March, but i’m executive says its not received. Can you please look into this

  28. Ramya Shilpa says:

    Dear,
    This year i have STCG of approx 1Lak on all my equity, with recent events my short term loss is more than 30Lak.
    Can i carry forward STCG for next years? If so which section i should reflect my loss.

    • Team Quicko says:

      Hi Ramya Shilpa,

      You can set off STCL of Rs.30,000 with the STCG. Remaining profit of Rs.70,000 (1,00,000 – 30,000) would be taxed at 15%.
      Please note that STCG cannot be carried forward. STCL remaining after set-off can be carried forward for 8 years and adjusted against future STCG.

  29. Ramya Shilpa says:

    Dear,
    This year i have STCG of approx 1Lak on all my equity, with recent events my short term loss is more than 30Lak.
    Can i carry forward STCG for next years? If so which section of ITR2 should i use to reflect my loss.

  30. Akhil says:

    Hello

    Thank you for detailing the tax loss harvesting method. I have just 1 query on this statement – “If you intend to hold these stocks and don’t want to sell them, you can buy the stock back after two days of selling. Two days because that is the settlement cycle when you buy or sell stocks.” – so I’m not clear on logic behind buying back after 2 days. What if I buy back the same shares after 10 minutes ? Wouldn’t it book as realized loss ? I’m concerned because, as high volatile market is going on now and if I wait for 2 days, share price could increase considerably which would make further loss to me which can even be higher than what I gained on tax amount. Please clarify.

    Regards,
    Akhil K

  31. Satyesh says:

    I have booked STGL. I want to settle this in current FY19-20 by booking STCG (instead of carry forward STCL to next FY). If,via Zerodha, I sell MF on 31st March 2020, and book profit, will the profit be considered in FY19-20 Or FY20-21 ?? (as the redemption amount reflects in T3)

  32. Mrityunjoy Mishro says:

    Dear Team,
    Kindly guide how to get the benefit out of it, I dont know how to submit the same to the tax department.

  33. Mahesh says:

    Do we have to pay if we just hold Equity mutual funds.. I have not sold anything in the last year

  34. Vaibhav says:

    I had recently bought stock’s of certain company for long term, do i have to pay the tax?
    My investment is around 20k.

    • Team Quicko says:

      Hi Vaibhav,

      Capital Gains Income would arise when you sell the stock. Here is the tax on Capital Gains from sale of equity shares:
      1. STCG – Taxed at 15%
      2. LTCG – Taxed at 10% if it exceeds Rs.1,00,000. If LTCG is less than Rs. 1 lac, it is exempt from tax
      Note: If there is no other taxable income, STCG or LTCG is not taxable up to the basic exemption limit of Rs.2,50,000

  35. Rajan Palliyan says:

    Where can I get garndfathering traded value as on 31/01/2018 of NSE.

  36. Abhit Karnik says:

    Hi, if I have sold off shares that are older than 2 years (LTCG) and the capital gain on selling was less than 1 lakh INR in last financial year. Then as per rules of LTCG, Do I need to do anything in terms of Tax Loss Harvesting?

    • Team Quicko says:

      LTCG is taxed at 10% on the sale of Equity Shares and unit of Equity Oriented MF. However, exemption up to Rs. 1,00,000 is given u/s 112A. However, if you have some STCG and unrealized loss in Short Term then you can take benefit of Tax Loss Harvesting to reduce tax liability on STCG (taxed at 15%).

  37. Hasina says:

    Hi Sir,
    I have net loss in my portfolio. Do i need to pay income tax. I am doing trading recently and did investment earlier but currently sold all shares and do.not have any share now. I have mutual fund which is also in loss. Please advise. Thanks.

    • RAVI KUMAR says:

      NO. tax is when you have income. if you are fully in loss then there is no need to worry.
      If you have generated income then comes the role of tax loss harvesting .

  38. sunil says:

    Console is not working it is giving error.

  39. Girish says:

    Hi Sir,
    I have net loss in my portfolio. Do i need to pay income tax. I am doing trad recently and did investment earlier but currently sold some shares and have many shares now. Please advise. Thanks.

  40. Prince Manova says:

    What if am not selling any stocks and am trying to hold from the beginning , do i need to pay taxes, can you enlighten me on this.

  41. Rajan Shah says:

    Is there any difference whether after sold our unrealised loss portfolio, we immediately buy the same share or we have to purchased after 2 days?
    Based on both perspectives trader and investor.

  42. amit says:

    well the console you show has been down and always give error msg instead of this report, kindly fix it please
    “Error checking tax-loss harvesting opportunity”

  43. Swapnil says:

    Tax harvesting report is throwing up an error upon trying to open it up from console. kindly look into it

  44. Pratik says:

    My money is stuck in MUL . I even can’t sell it. What to do? How to book loss?

    • Pratik says:

      Hi Team, please reply me what shoul I do?
      As I am very new to it. And dont even know what to do. I loose money in intra-day but that not big amount but bought few stock with a capital more than 1.5L and that money is stuck as i can’t even sell the stock. Can I harvest this?

  45. Deepak Pudgane says:

    If my holdings less than 1 lac still I have to paid the tax .

  46. Abhisek says:

    Hi,

    if i book profits within a year by selling a particular stock and then utilising the same money in the market then will that be subjected to tax as i am reinvesting the amount not encashing or crediting to my bank account.

    regards,

  47. Mk says:

    What would be last day for tax harvesting if gain need to setoff again loss script? If I sell on 31st March then will it be considered and calculate in fy 2019-20???

  48. Vamsi says:

    Dear Sir,
    I don’t have any income. Can I also should pay the income tax OF regarding STCG and LTCG. but today my portfolio is 30% loss.

  49. Pratik says:

    Hi Team, please reply me what shoul I do?
    As I am very new to it. And dont even know what to do. I loose money in intra-day but that not big amount but bought few stock with a capital more than 1.5L and it’s still in my portfolio with 86% Loss. That money is stuck as i can’t even sell the stock currently. Can I harvest this?
    Thankyou

    • Team Quicko says:

      Tax-loss harvesting ( in Indian context) is a concept of setting off your Net Short Term Capital losses against Net Long Term Capital Gains to reduce your tax liability for the current financial year.

  50. Sree says:

    I booked short term gains 1.8 L.

    I booked loss current financial year 9.6 L.

    Should I need to pay any tax. Please clarify

    • Team Quicko says:

      Hello Sree,

      Short Term Capital Losses (STCL) can be set-off against both Short Term Capital Gains (STCG) and Long Term Capital Gains (LTCG). However, Long Term Capital Losses (LTCL) can only be set-off against LTCG. In case you are unable to set-off your 9.6 Lacs losses, you can carry them forward up to the next 8 years. However, you will be liable to pay taxes on any capital gains if your income exceeds the basic exemption.

  51. Rajeev says:

    Hello Zerodha team,
    The Tax-loss harvesting module is not responding and giving error. Could you pls check .
    thanks

  52. Pavan Sharma says:

    For me, it displays as, “You have no realized capital gains and unrealized capital loss” in the console.

    Still anything i need to do for taxation??

  53. MIDDINTI KRISHNAMA NAIDU says:

    Can we redeem on 31st Mar 2020?

  54. Rakesh shah says:

    Same question, was the last date today March 30 or can we sell tomorrow March 31 also since financial year ends tomorrow?

  55. Shakti Kheria says:

    Since the financial year is not ending on 31st March anymore and has been extended till end of June, so can we still do the tax harvesting on 31st March to get the portfolio change getting reflected in T+2 days on 2nd April?

  56. Chitrang says:

    I have the same question. Can we sell tomorrow (March 31) as well since financial year ends tomorrow?

  57. Nishant says:

    why 30th March, market is open on 31st march as well.

    article said, today is the last date? why, is there any rule, i don’t think so.

    can’t we do loss harvesting today.

    • Nakul says:

      This is a grey area. The ITD can consider the date of movement of stocks in your demat as well. Hence, it’s best to be safe and sell beforehand so that the stocks would have moved out by 31st March.

  58. Chitrang says:

    Request someone to revert on the above query raised by three different individuals? Have been trying to reach out to Zerodha as well.

  59. Sanchit says:

    Hi, I just wish to know that transactions made on 31th march can be considered in tax loss harvesting or not?

    • Nakul says:

      This is a grey area. Best you consult a CA. The ITD can consider the date of movement of stocks in your demat as well. If you’ve sold on 31st March, the stocks wouldn’t have gone out from your demat.

  60. vijay says:

    Hello Team,
    I invested Rs:5,695/- in the mid of March this year. Current Equity value showing is Rs: 4,297/- which is in loss. Can i sell the stocks now as part of Tax loss harvesting as i kept the stock for short time only for 10-15 days. please suggest what need to done in this case.

    Thanks
    Vijay

  61. sandeep yakkala says:

    try searching HQX100 fraud

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