March 30: Last Chance for FY26 Tax Savings via Tax-Loss Harvesting

• Investors have until March 30 to utilize tax-loss harvesting for FY2025-26 tax optimization.
• Tax-loss harvesting allows offsetting capital gains by booking losses before the financial year ends.
• Capital gains are determined by the trade date, not the settlement date; sales on March 30 count for the current FY.
• Short-term losses can offset both short-term and long-term gains, while long-term losses only offset long-term gains.
• Unadjusted losses can be carried forward for up to eight assessment years; LTCG up to ₹1.25 lakh is tax-exempt.

Key Questions Answered

How does tax-loss harvesting impact long-term investment strategies?

Tax-loss harvesting can optimize taxes and improve post-tax returns, but should support, not drive, long-term investment decisions.

What are the potential risks of last-minute tax-loss harvesting decisions?

Last-minute tax-loss harvesting decisions carry risks such as increased transaction costs, disruption of long-term portfolio allocation, market volatility, liquidity issues, and execution problems {{1

Can tax-loss harvesting be applied to all types of investments?

Tax-loss harvesting is primarily used for equity and mutual fund investors. It allows taxpayers to offset capital gains by booking losses.