Tax loss harvesting opportunity – FY 2017/18

March 27, 2018

Traders,

Financial year (FY) 2017/18 is coming to a close on March 31st. We had a good run on the exchanges until Jan 2018, followed by the drawdown in the last two months. If you have net realized short-term capital gains this FY, and currently hold stocks which have unrealized losses – you have a tax loss harvesting opportunity. You can book losses by selling your holdings to the extent of the realized gain, and reduce your tax outgo and bolster your returns.

For example, assume you have made Rs. 1lk in short-term capital gains this year. You will need to pay 15% of this as taxes or Rs. 15000. Also, assume that you currently hold stocks which are having an unrealized loss of Rs. 60,000. You can sell these stocks to reduce your net STCG to Rs 40,000. You would hence have to pay 15% of Rs. 40,000 or Rs. 6,000 as taxes  – saving you Rs. 9,000 in taxes. This exercise will let you harvest your losses and save on taxes – hence called tax loss harvesting.

Visit our module – “Markets and Taxation” on Varsity to learn everything about taxation when trading/investing.

We have created a report for you on Q, which shows the tax loss harvesting opportunity in your account. Using all the trades executed at Zerodha last FY, it shows you the unrealized loss up to the extent of the realized gain as the opportunity.

Visit: https://q.zerodha.com/report/tax_loss_harvesting/2017 (the report might take some time to be generated). See below, a sample report. This account has short-term equity profits of Rs. 74,381 and unrealized short-term loss of Rs 1,09.590. We could sell stocks worth Rs. 74381 from the list of stocks and save taxes up to 15% of Rs. 74,381 or save up to Rs. 11,000 in taxes. If you have another trading account with short-term capital gains, you can sell up to Rs. 1,09,590 worth of stocks.

Tax loss harvesting report

 

You can harvest loss using either of the below actions before 28th March 2018 (last trading day for FY 17/18). You can combine your mutual fund investment P&L along with stocks while calculating the harvesting opportunity.

  1. Sell the holdings, book the loss to the extent of realized gain you have. Buy it back the next trading day. This is the most compliant way to execute but carries an overnight risk in case the stock price moves up.
  2. Sell the holdings on one exchange (NSE or BSE) and buy it back from another at the same time. At Zerodha all such trades are settled with stocks moving out of your demat and then getting credited back (hence considered different delivery trades). There is no price risk following this route, but a little grey in terms of compliance (there’s no specific regulation in India which says loss can’t be harvested this way, but some developed markets don’t allow this, hence saying grey). Do consult your CA before deciding.

Tax loss harvesting is an exercise followed by savvy traders to optimize returns. Do share it with your friends and family.

 

Happy Trading,

Nithin Kamath

Founder & CEO @ Zerodha, team working towards breaking all barriers that I personally faced as a retail trader for over a decade. Love playing poker, basketball, and guitar. Getting body fat % in single digit is the next personal endeavor :) .

151 comments

  1. G says:

    I am a student with zero income
    I only earned through stocks(which was less than 2.5 Lakhs) so will I stillhave to pay taxes?

  2. V says:

    Just file Income Tax with 2.5 Lakhs, it will show 0 Tax to be paid. That’s it.

  3. RMitra says:

    Nitin
    If my income does not exceed allowed limit (I guess it is 4Lk including the investments) do I have to pay 15% tax on the gains ?
    Thanks.

  4. Sumit vishwasrao Pawar says:

    I am a student yar…so play taxe so income for 100000 RS

  5. DJC says:

    I have a loss in current year is it compulsory to show in income tax file.. as my other income is not taxable i.e agriculture. So i dont have to pay tax.

  6. Amish Kumar says:

    case 1 : if your income is through intraday, then above Rs. 2,50,000 income is taxable @ falling income tax slab.

    Case 2 ; if your income is through delivery trades then straight forward 15 % of Short Term Capital Gain Tax imposed irrespective of less than 2,50,000 income.

  7. Shesh says:

    @ Nitin, you are doing great. Appreciate. Thanks for making life easier for retail traders and investors.

  8. S.S says:

    I am a housewife, this year I gained 245000 as short term capital gain, i do not have any other income.Do I need to pay 15% as capital gain tax ? or I am excepted from tax as my income is below 2.5 lacks slab??

  9. Sachin says:

    Yes, you have to pay Short term capital gains at 15%, Intra-day earnings are taxed in a different way so that you can adjust them with your tax slab. Please consult with your CA for proper tax calculation.

  10. Nitin Jain says:

    I have faced 10K losses in nse cash,currency,mcx crude.Do i need to file income tax return asap ? or is it not necessary to file return as i had faced loss ?
    Can i file itr online or necessary to go for tax aduit farms ?

  11. Rajesh says:

    I am not getting profit as what I invested always in losses but little recovery I did equity and f&o so should I come in tax? I’m unemployed and no other I come

  12. Kapil says:

    I am a trade in this year I was loss 940000 in do trading now how is set off or carry forward I am also govt employee or which return I shall file

  13. Rohith says:

    I’m a student and I made a loss of 3200 and I don’t have any other income, so should I have to file my return

  14. Somenath says:

    You are not required to.

  15. Narayanan says:

    No.

  16. vijayd says:

    can you pls clarify if I can book unrealized losses & carry forward this loss to be adjusted next FY against future short term gains. for how many years can short term losses be carried forward? thanks

  17. Anubhab says:

    If my earnings are 2 lk per annum and my long term capital gains are 500,000.Do I need to pay 10% ltcg.

  18. Aslam QURESHI says:

    I have lose 30 thousand this year
    What I do,,,?????

  19. kk says:

    if i have incurred losses in trading do i need to file it??

  20. Rati ranjan sahoo says:

    Sir I gain in F&O 3.5 LKS. BUT IN MY PORT FOLIO LOSS IS 80K. CAN I SELL ALL MY PORTFOLIO TO OFFSET THE LOSS. PLEASE SUGGEST

  21. kk says:

    if i have incurred losses in trading do i need to file IT?? i am still a student

  22. Vipul Gupta says:

    hi,

    can I just sell my shares CNC and them buy again CNC on the same day? Or Do I need to wait overnight (or 2 days, please confirm) to buy the shares back again?

    Please reply.
    Thanks.

  23. S.S says:

    I earned Rs. 245000 this year. Will this money considered as Short term capital gain or other income in the head Income from other source?

  24. Hiral Shah says:

    Trade only in commodity segment on delivery based. Pay 15% as a tax or not ?

  25. sanjeev says:

    sir i already lost more than 4 lakh in equity due to peny stock (steel exchange)with cont lower ckt . can i utilise it any way as i am govt servent and my saving re already 1.5 lakh this year which is max permited saving limit .

  26. Rajesh Thodamkannath says:

    Thanks a lot NITIN for taking this step.
    As of now there is a gateway error while accessing the report, but having this report is a bliss for us.

    Rajesh.

  27. molly ajith says:

    hi my total profit from short term capital gains is 10 thousand and i dont have any other income should i still pay the tax.(i have started in investing only 6 months back)

  28. Santosh says:

    Hello, I heard last day for tax harvesting was 27th mar 2018. Please confirm. As 28th onwards trade will be considered in next financial year.

  29. Yasmeen says:

    Sir to exempt my portfolio from LTCG can I sell all my portfolio holdings which is 1 yr old and buy it back today itself
    Will it be claimed as Exempt from LTCG as per Guideliness?

    • hmm.. you can, but there is no need to. In any case you get to grandfather all your holdings to Jan 31st price (which was higher generally for all stocks). You have to pay LTCG in future based on the gain from the price as on Jan 31st. Check this.

  30. Krishna says:

    Sir ,
    Query 1: I am paying huge amount of STT charges , I am from Chhattisgarh State .how can i reduce that ?
    Query 2: How tax loss harvesting will help me , if i book losses as tax is not applicable for losses? kindly guide me

    Thanks in advance

  31. vasanth says:

    I occuring losses from my capital Rs.3000. I tool margin and my traded value is around 5 lakhs, but upto date my loss is Rs.350. Do I need to pay tax for the traded value???? Pls reply…

  32. BHARAT KANODIA says:

    The tax loss harvesting report is not getting generated.
    I feel that if the Gross total Income is below taxaxble limit say Rs 180,000/- and you have Short Term or Long Term capital Gains (besides the above income) of say Rs 30000/- it will BE NOT TAXABLE.

  33. Sindhu says:

    Hi,
    I have booked several losses this year to the tune of 2,86,000/- and yet my harvesting is empty at – https://q.zerodha.com/report/tax_loss_harvesting/2017?

    How can this be? Either the Q link for Tax P&L shows bad gateway or if it does open up and show, I click the Tax loss harvesting, there is nothing mentioned next to “Tax loss harvest opportunity :” in terms of rupees that I can save. Even the “Realized Profits” field is empty. Kindly guide, thanks.

    • It will show a number only if you have realized profits and unrealized losses.

      • Sindhu says:

        Thank U for the response. My CA asks for quarter wise trades done with dates while filing the tax. I have till date not found it. He says it is difficult to file the way I give the zerodha Tax P&L to him in the excel sheet with trades conducted in the FY, but has no date wise/quarter wise data. Why is that? This is for ITR2, I have no other income.

  34. Gaurav Gera says:

    This is the equation according to you.
    “For example, assume you have made Rs. 1lk in short-term capital gains this year. You will need to pay 15% of this as taxes or Rs. 15000. Also, assume that you currently hold stocks which are having an unrealized loss of Rs. 60,000. You can sell these stocks to reduce your net STCG to Rs 40,000. You would hence have to pay 15% of Rs. 40,000 or Rs. 6,000 as taxes – saving you Rs. 9,000 in taxes. This exercise will let you harvest your losses and save on taxes – hence called tax loss harvesting.”

    My question is in order to save 15000 bucks as a tax, one has to sell his or her stocks worth rupees 60000. You have definitely saved 9000 bucks but you have lost 60000 bucks too.

    Can you please clarify the same or I’m missing something here ?

    Thanks,
    GG

  35. Mubashir says:

    Hi sir, all I want to know is the stock that I sell should have the value of my capital gains or the loss amount should be equavalant to gains & moreover do I need to do anything else apart from selling my stock on which I had made gains. Please answer

  36. Shiv says:

    Hi Sir,

    I have lost almost 4 Lakhs in this Short term Bank nifty and Options. but didn’t get any profits. In the middle i got but i have invested that amount also so i lost totally 4 lakhs with out any gains over all this year. .. so Do i need to show to the income tax that I have lost the amount. will it be considerable if i gain in future.

    Please advise what to do.

  37. Ravindra says:

    i am a salaried person and have some stcg this FY. Please tell which ITR i can fill online to show my income from salary and stcg and paid advance taxes

  38. Vikas says:

    As per my understanding of the information on STGC on the incometaxindia.gov.in website. If you’re income is less than the taxable limit, STGC will be adjusted in the personal exemption slab and only the value exceeding the exemption limit will be taxed at 15%.

    Eg1 : if your income from other sources is zero and the STCG is 2lakh then you’ll have to pay zero tax as it’s less than 2.5L slab.

    Eg2: your income from other sources is 2L and your STCG is 75K. Here the total will come up to 2.75L. So for anyone below the age of 60years, 25k is exceeding the exemption slab of 2.5L. So in this case STCG tax of 15% plus cess will be levied on the excess 25000rs.

  39. Sachin says:

    Sir i am invested 20000 rupees, in that my holding ihave lossed 5000 rupees i also pay the tax

  40. saugat says:

    Sir,
    I incurred loss of about 34k in intraday. I got profit of 13k in cnc short term. Which gets to net loss of about 21k. Do i have to pay 15% tax on 13k cnc profit?

  41. Gajendra says:

    Hi,

    I have made a profit of 12000 rs (Delivery + Intraday equity) and loss in Future trading of 12000 rs. Does it nullify when we compute tax for the current year.

    Regards,
    Gajendra

  42. Prakash Kawade says:

    How me know about total gain or loss of financial year of 2017/2018

  43. iril says:

    nithin, where in zerodha i can get my consolidated trading statement to get profit/loss for FY 17-18 ?

  44. Adnan Alam says:

    Thanks Nitin for your valuable inputs.

  45. Mubashir says:

    Can I sell my stocks tomorrow as booking loss and get tax exemption. Moreover. Apart from selling, is there anything else required by my side to do for getting tax exemption? Please answer sir

  46. Tharun says:

    I think this is a bad idea as you are only carry forwarding the tax liability here. Lets take an example of below stock in loss

    Stock: 10 Lupin @ Rs 900 bought on November 2017
    Current loss: Rs 1500
    Sold and Bought back for tax harvesting: Lupin @ Rs 750
    Assumption: Sold 10 Lupin @ Rs 1000 November 2018
    Profit with harvesting: Rs 2500
    Profit without harvesting: Rs 1000
    Tax liability in 2018 with harvesting: 15% on Rs 2500
    Tax liability in 2018 without harvesting: 10% on Rs 1000 (long term capital gain for 1 year holding)

    I may save some tax this year with harvesting. However when I sell the same stock next year in June, what I saved last year will get added to my profit and has to pay tax on it next year. So you are only carry forwarded tax liability by tax harvesting. There are also below disadvantages.

    1. Stock will show profit probably from next day without considering the loss you has occurred on the same stock last FY.
    2. Also we have to keep a separate record of old buy price and loss in order to know break even point to make actual profit on the stock.
    3. In above example if I didn’t got for harvesting I could have paid only 10% tax under long term capital gain.

  47. Aniket Pachore says:

    Hi,

    We have T+2 for delivery system. Then selling of stocks to book losses; is it not necessary to sell on 26 March considering 28 March is last trading day for this year. Also if we sell today; can we buy tomorrow?

  48. Kaveeta says:

    Hello Nitin Sir,

    Till date I have REALISED PROFIT₹-20,458.20, TOTAL CHARGES₹3,581.74, UNREALISED PROFIT₹-15,449.95. And also I have some holdings which are in lower circuit so I cant sell it because there is no buyer. 1 I sold today, 1 with loss of Rs.2000 and other with loss of RS.18000 , in this case what should I do for tax as well as to close these positions.Total Holdings with unrealized loss of ₹-17,949.20.
    Please give any suggestion to plan my losses properly.

  49. atish says:

    hi i am student and i dont have any other income and i joined zerodha last month and i invested 17k and currently my holdings are in loss, so will i still have to pay the tax ??
    will i have to sell my all holdings and buy it again ??

  50. Jignesh Patel says:

    I was trading since 1.5 month..but I loss 3000 rs from my capital…will I give tax?

  51. Mithil Gandhi says:

    Hi
    if i book loss tomorrow to adjust tax on short term gain, whether loss will be accounted in the current financial year as the actual stocks will be debited on T+2 (i.e. 2nd April i guess).

  52. Akshat Gupta says:

    I am a student (19 now) was not completely 18 years old in the financial year 2016-17 and i made about 10k realized profit and 40k unrealized loss.. Do i need to file an ITR??

  53. sundeep says:

    Sir this year , i lost 1,44,000/-₹ total in parts …in trading whole last year …like 10k in crude , than 10k in equity again come back with 10k in equity than again come back with 50k and loss in nifty + stock future . I am a student , dont have any source of income as all those was me n my mother’s saving, i dont know whom n where to file ITR . Please suggest me sir !

  54. Sateesh Kumar Chaurasia says:

    Should i buy the same stock again or i can buy different stock

  55. Anagha says:

    Can we do loss harvesting between demat holding shares & smallcase shares?
    Also is it applicable to if I have STCG is less than 1 lac in FY?

  56. Satya says:

    Hi Nithin
    I lost huge amount of RS 4-5 lakh this year . I have holding which is in 45k loss . Do I need to sell and buy again or suggest what to do if anything

  57. STA says:

    Current year I have a loss of 3 lacks in intraday. Can i show this loss in filling my ITRETURN?

  58. DHARMENDRA says:

    Hi nithin,
    My income is 4 lakh, my wife is housewife & she earned profit 1 lacks from my capital balance.it is taxable or not.

  59. Bulan foujdar says:

    I have invested 90k on nbcc at 257 rupees from that time stock is dwn trend… I am not in a profit last 4 months will i have to pay tax or not…. And my income yearly less than 2lakh.. So plz let me know the proper answer…

  60. Gautam Prakash says:

    My Loses (only of Equity) are Short Term Trades -83072 and Intraday loss is -298098 total amounting to about -381170

    So
    1) Will I be able to carry forward the loses for next fiscal year?
    2) If yes How long?
    3) I also have some losses in commodity so Can commodity trade loses be also carry forwarded?
    4) Turnover is around 55lakhs so do I need a CA to file my ITR?

    I am a working professional and my income is around 3lakhs. Any help would be greatly appreciated.

  61. Rahul Banker says:

    I do not see where you get this figure for the loss of 1,09.590 in the above image. Isn’t it the loss of 1,13,404? I would totally appreciate if you can explain this 🙂

    Thanks!

  62. Sanjoy says:

    Great article! Thanks a ton.

    One clarification please regarding your comment “You can harvest loss using either of the below actions before 28th March 2018 (last trading day for FY 17/18).” – Can we do it till 28th March ?? I was given to understand that last day for this kind of exercise should be 26th March since the settlement for all trades done on this date would be done on 28th March, after which the stock market will open on next financial year.

    Appreciate your clarification please.

  63. vaghasiya ketan says:

    Sir me me monthly investment kar raha hu 2500 rupees alag alag stock pe20 years ke liye kya shahi hai?

  64. chintu gurbani says:

    Can we do tax harvesting on 28th march by selling on 28th ??

  65. Sush says:

    Hi Nothing,
    On 27th March, I sold few shares as a part of tax loss harvesting. Can I buy same shares on 28th March with same quantity?
    ->Accordingly to “Wash rule”,if you sell stock for a loss and buy it back within 30 days before or after the loss-sale date, the loss cannot be immediately claimed for tax purposes.
    Please clarify, whether to buy same share on very next day ( 28th March) or not?
    Please reply as soon as possible
    Thanks in advance

  66. Chaitanya says:

    “Sell the holdings, book the loss to the extent of realized gain you have. Buy it back the next trading day. ”
    Why is there a need to wait till next trading day? Why can’t I sell and buy at the same time? Will it be considered an intra day trade or something? Will it be considered intra day trade even if I select CNC when placing those orders?

  67. Aditya says:

    Are FnO losses shall be accounted together with Equity gains or calculated separately?

    Im in profit of 5L in equities but in losses of 2L in FnO? How to calculate gains? together (3L profit) or separately?

  68. Saurabh says:

    Is there anything like Wash sales in India?
    PS. I am a new investor in Market. Learned everything from Varsity. Thanks for that!

  69. Jatinder Jaswal says:

    Hi Nitin,

    What are the rules regarding “wash sales”? For tax loss harvesting Can i sell stocks with unrealized loss and buy them again on next day? Will that help me to reduce taxes? Or is there any time limit within which if i buy the same stock I will not benefit from tax loss harvesting?

  70. srinivas says:

    if i have a tax loss harvesting opportunity of 5 lakhs does that mean i have to sell 10-20 lakhs worth shares booking 5 lakhs short term loss and offset from the shortterm gain. will this not be only for taxation purpose. wont i be really losing value of my portfolio even if it is (false) assuring that i will keep the same portfolio. by this arent we making unrealised loss into realised loss ?

  71. Aby Thomas says:

    Hello,

    Does this really matter to do tax harvesting on end of Financial year?
    or Should we just consider only the 365 day period to do tax harvesting?

    Assume selling (booking loss) of 1 lac today and buying same shares on next trading day
    Two scenarios if I sell today (end of FY)
    1- Price moved up the next trading day, so not beneficial
    2- Price decreases the next trading day, and I buy again – so it “looks like” beneficial.

    Suppose I hold on to the loss without selling on last day of FY:
    Two scenarios:
    1- Price decreased further – I book more losses next financial year (within STCG period of 365 days), so more tax saved next year (If STCG is profit next year, else if loss, carry forward to next 8 years)
    2- Price increased – My loss reduced next financial year, and I continue to hold or sell (book less loss)

    Just saying, unless the loss is within the 365 day period, is there really a benefit in tax harvesting? or am I missing something 🙂

    Thanks,
    Aby

  72. Mohsin Shaikh says:

    Hi Nitin,

    Its very great that you share such a wonderful and informative articles.

    Please go through my query as below,
    I fall under 20% bracket and currently I have Short-term profit₹-764.70.

    I’ve further equity in my demat which are ₹-4,371.30 and not completed 1 year.

    Shall I sell and repurchase tomorrow to save tax of around 1000 Rs? What is the last day when I can sell and save tax.

    Please let me know as soon as possible.

    Regards,
    Mohsin

  73. Mayank Jain says:

    Hello Nithin,
    Best wishes to you.
    My query is, I sold some shares which were showing loss in my holdings on 27th of March 2018 after reading your informative article on tax loss harvesting. But I am now wondering that since settlement happens after T+2 day and March is left with only one trading day as 29 and 30th are holidays in India. Will I be able to do loss booking or was I too late to book losses?

  74. riyas says:

    dear nitin sir,
    i have an decent douts please clear the douts and educated mein option ftrading

    for example
    nifty spot-10000

    i sell call at 10500 @10
    i sell put @ [email protected]

    what is the stop loss i want to put for safe trading please explain me

    thanks

  75. Ranikalai says:

    Dear Nitin,
    First of all I want to appreciate u for your efforts (kite 3.0 , UPI, Support portal ) to take Zerodha to high levels. I have referred and recommended Zerodha to many of my friends and family members & many are using Zerodha.

    Very sad to say this, Now a days there are errors in the Contract notes especially while SELLING the options and also the average price is being adjusted wrongly while the sell position was carry forwarded.
    I have mentioned about the issue to the support team via phone and also by ten days time span I have raised Two Tickets about the issues.
    Ticket N0: #20180321398351 on March 21 2018 while selling options I made a profit of nearly Rs 7000. But profit money was not added to my account instead they deducted money nearly Rs 7000. I called the support team they argued regarding it , as I had trust and confident on Zerodha I thought myself there was some mistake on my side. After that I had closely watched my trading activities.
    Again the problem happened on March 28 2018 I raised compliant Ticket NO :#20180328347323 this time I made a profit of nearly Rs 9000. Instead of crediting profit to my account they send me a contract note that I made a loss of Rs 11880.
    Before days if we write to Support team they used to analyse the problem and the reply will be in a prompt manner. While I sent the problem they telling the difference between Option Buying & selling. As I m bit experienced in trading, so only I m selling the options. The reply I got from support team was annoying and unacceptable, while the average price problem happened initially the support team didn’t accept it, later the problem was corrected. Now a days these things forced me to take screen shots daily because the support team always denies when there is a error.
    Now a days I m always facing problem in selling options in terms of Average price and booking profit. Daily making calls to the support team and sending mails which is very tried during hectic trading sessions .I hope u can understand how difficult it is in a traders point of view.
    Please do take necessary action as earlier as possible as i m daily representing to the support team either through phone or mail.

    Thanks,
    Rani

  76. MANJUNATH rv says:

    I am a customer in zerodha my id is ZU5388 I am an engineer and I tried for a vacancy in zerodha but no positive results and I have little knowledge on day trading and I wish to work for zerodha 😊

  77. pratap says:

    Dear Nitin,
    I have been one of the biggest fan of Zerodha and I have recommended it to tens of people. Have been using it for the past 2 years.. but off late I’m a bit disappointed regarding the back office issues..
    My client ID is RP7493.. have raised a ticket and called multiple times regarding my tax P and L .. It shows incorrect data.. I have attached a screenshot as well in the ticket.. have been waiting for a response for a while now.. Would appreciate if you could look into the matter.

  78. Jayant Maurya says:

    HI Mr. Nitin,
    Gov employee can’t do intraday trading as this is speculative income, so it means in F & O they can trade ( as f&o is non speculative )

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