Are there ways to manage LTCG better—like harvesting losses?

Tax harvesting is a strategy used by investors to reduce their tax liability by strategically selling shares. This technique primarily involves two methods:

Tax-Loss Harvesting: Selling shares at a loss to offset taxable gains.
Profit Harvesting: Selling shares at a high profit and rebalancing the portfolio.
Let's explore these concepts in detail.
1. Tax-Loss Harvesting

Tax-loss harvesting involves selling shares that have declined in value to realize a loss. These losses can be used to offset capital gains, thereby reducing your taxable income.

How Does Tax-Loss Harvesting Work?

Sell underperforming assets: Identify shares with unrealized losses.
Offset gains: Use the realized losses to offset gains from other shares.
Carry forward losses: If losses exceed gains, you can carry them forward for up to 8 years in India.
2. Profit Harvesting

Profit harvesting is about selling shares when they hit a high-profit point to lock in gains. The investor can then rebalance the portfolio by reinvesting in low-risk stocks or diversifying stocks.

When to Use Profit Harvesting?

During market peaks or when stocks are overvalued.
To rebalance your portfolio and maintain your investment strategy.