Outlook Money
By using this strategy, an investor can sell loss-making investments to offset taxable gains from other investments. This helps reduce the overall tax liability.
This scheme is helpful for those investors who have lower than experienced returns from their stocks and mutual fund investments. By selling the underperforming assets, one can set off the losses.
Tax-loss-harvesting legislation is present in Sections 70–71 of the Income-tax Act of 1961.
With tax loss harvesting, investors can convert market dips into tax-saving opportunities, therefore, ensuring that their money works smarter, not harder.
The benefits include a reduction in tax liability, portfolio balancing and in carrying forward the capital losses.