Tax-loss harvesting has gained relevance amid stock market volatility, with many investors holding losses in equities. Meanwhile, assets like gold and silver have delivered strong returns creating a higher tax liability for some.
With the financial year 2025-26 ending today, many investors are scrambling to reduce their tax burden. Most focus on familiar tools like ELSS or standard deductions but there is one strategy that often gets overlooked – tax-loss harvesting.
This year, the tax-saving strategy has become even more relevant. Stock markets have been volatile, leaving many investors with losses in equities. At the same time, assets like gold and silver have delivered strong returns, pushing up tax liability for some.
This creates an interesting situation: a loss in one part of your portfolio can help reduce the tax on gains in another. As one financial expert, pointed out that tax-loss harvesting is not just about saving tax today. In some cases, it may make more sense to pay a small tax now in order to save a much larger amount later.
What is tax loss harvesting?
Tax-loss harvesting simply means using losses from one investment to offset the tax on gains from another.
For example, if you have made profits in gold or silver but are sitting on losses in stocks, those losses can be used to cancel out the gains, reducing your overall taxable income and lowering your tax bill.
And if you have no gains this year, the losses can still be carried forward for up to eight years and used to reduce your tax in the future.
Read Also: https://taxguru.in/income-tax/
Why tax harvesting is relevant this year
This financial year has seen a clear split in asset performance. While equities have struggled, gold and silver have delivered strong returns.
This means many investors may be sitting on losses in stocks but gains in commodities. Tax-loss harvesting lets you use those stock losses to offset gains from gold or silver, which can be taxed at rates as high as 30%.
As financial experts point out, tax-loss harvesting is not just about reducing your tax bill today, it is about planning ahead.
Consider this example: an investor has gains of Rs 6,00,000 from gold and silver, and losses of Rs 6,90,000 in equities.
By applying Rs 6,00,000 of those losses, the investor completely wipes out the tax on the gold and silver gains.
That still leaves Rs 90,000 of unused losses, which can be carried forward to future years.
Pay tax today or save more later
This is where the strategy gets interesting. Most investors would use the remaining Rs 90,000 loss right away to bring their tax bill to zero. But experts point out that this may not be the smartest move.
If you use this loss today against equity gains that taxed at 12.5%, the saving works out to around Rs 10,000.
But if you carry that loss forward and use it next year against gold gains that taxed at 30%, the saving jumps to Rs 24,000.
Yes, you pay a small tax of Rs 3,125 today. But you save considerably more the following year.
Over two years, the total tax burden drops from Rs 45,000 to Rs 24,125 – a net saving of Rs 20,875.
Why investors need to be careful
That said, this strategy works best when you expect gains in the future. If there are no future gains, carrying forward losses may not deliver any real benefit.
It is also worth remembering: do not sell good-quality stocks just to book a loss. Tax saving should never come at the cost of your long-term investment goals.
With the financial year ending today, now is the time to review your portfolio carefully. Identify investments where you are sitting on losses, check whether you have gains that can be offset, and decide whether it makes more sense to use those losses now or carry them forward.
Tax-loss harvesting is not just about saving tax today. It is about making your losses work harder for you.
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