Tax harvesting: Strategy for offsetting losses that needs careful planning

Equity investors should go for the strategy before March 31 and reduce their liability on capital gains

The equity market is going through a turbulent phase with the Nifty 500 Total Return Index, a gauge of the largest 500 stocks by market cap, registering a loss of 3.7 per cent year-to-date. Many stocks and equity mutual funds within your portfolio must be in the red. One way you can use these losses to your advantage is to go for tax-loss harvesting.

Income-tax provisions allow investors to set off their losses and thereby reduce their tax liability. “Tax-loss harvesting involves the sale of investment assets at a loss to offset the capital gains from selling other assets at a