Paying tax on equity gains?
Tax-free gains, ₹1.25 lakh a year.
- The tax if you do nothing
- What booking gains each year saves
- Family exemptions and Section 54F
These strategies save you
tax ₹7.05 L instead of ₹8.68 L when you sell in 2036
- Gains booked tax-free
- ₹12.5 L
- over 10 years
- Worth when you sell
- ₹1.07 Cr
- ₹39 L put in
The tax you'd owe if you sold
Each year before that year's harvest. The gap is tax you'll never pay.
Your inputs
Your equity portfolio
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₹50K₹10 Cr
₹
₹10K₹10 Cr
₹
₹0₹5 L
%
1%20%
2 yrs30 yrs
Exemption strategies
Just you4 people
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₹0₹10 Cr
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What this means
- Moving the money costs about 0.1%: ₹2,655 over 10 years, already taken off the saving.
Why?
STT on the sale and stamp duty on the purchase. Equity funds also charge an exit load on units under a year old, which harvesting never sells.
- Skip ELSS and anything with an exit load. Bought-back ELSS units start a fresh 3-year lock-in.
Why?
Harvest holdings you can sell and buy back freely: shares, index funds and other equity funds past their exit-load period.
More details
What each strategy saves
- Book ₹1.25 L of gains every year₹1.6 L
Sell and buy back before 31 March.
- Add family members to use their exemptions too
- Buying a home? Add it to see the 54F saving
How to harvest, every year
- Before 31 March: your room is ₹1.25 L minus gains already booked this year
- Sell: units held over a year, up to that room
- Buy back: the same day: no rule against it
- Report: in your return, Schedule 112A
- Wait a year: before harvesting the bought-back units
How it's calculated
- Growth: your portfolio and monthly SIP grow at the return you set. Today's holding is taken as over a year old.
- Harvesting: each financial year before the sale, up to ₹1.25 lakh of long-term gains is booked, oldest units first, and bought straight back. That raises your cost, so less gain is left to tax later. Selling and buying back costs 0.1% of the amount moved.
- Family: each adult holding part of the portfolio in their own name harvests their own ₹1.25 lakh a year and gets the exemption again at the final sale. The portfolio is split equally.
- At the end: everything is sold in one year. Units bought within the last year pay 20% short-term tax; the rest pay 12.5% above the exemption, plus 4% cess.
- Section 54F: long-term gains are exempt in the share of the sale money spent on a home.
Surcharge and your other income aren't counted. Returns aren't guaranteed; the saving grows with them.
Tax figures follow Budget 2025 rules, for FY 2025-26 onward.
Common questions
What is tax harvesting?
Selling units with up to ₹1.25 lakh of long-term gains before 31 March each year and buying them back straight away. The gain is tax-free under Section 112A, and your cost goes up, so there's less gain to tax when you finally sell.
Is tax gain harvesting legal in India?
Yes. India has no rule against buying back what you just sold, and the ₹1.25 lakh exemption is available every financial year. Report the sale in Schedule 112A of your return.
Can my family use their own ₹1.25 lakh exemption?
Each adult gets their own exemption on investments in their name. Money you gift your spouse or a minor child is clubbed with your income, so their gains count as yours. Gifts to parents or adult children aren't clubbed.
How does Section 54F save tax on selling shares?
If you sell long-term shares or funds and put the whole sale amount into a home within 2 years (or build one within 3), the long-term gain is exempt, up to ₹10 crore. You mustn't own more than one other home at the time.
Should I harvest ELSS or funds with an exit load?
Usually not. Bought-back ELSS units start a fresh 3-year lock-in, and an exit load can cost more than the tax saved. Harvest shares, index funds and equity funds past their exit-load period.