Tax loss harvesting in India: practical LTCG/STCG workflow

Last reviewed: 2026-02-28

Direct answer

Tax-loss harvesting is useful only when you evaluate both tax categories (LTCG/STCG) and post-trade return quality. The right workflow is: measure XIRR, estimate tax impact, then choose the lowest tax drag path that preserves portfolio quality.

When harvesting helps

You have realized gains and unrealized losses in the same period.
You can avoid forced churn and keep portfolio risk exposure aligned after the adjustment.
You evaluate after-tax outcomes instead of nominal gain percentages.

Step-by-step process

Measure current performance at portfolio level using XIRR.
Estimate LTCG and STCG outcomes for candidate exits.
Simulate post-tax cash and reinvestment options.
Execute only if after-tax return and risk profile improve.

Tools to run this workflow

XIRR Calculator for timing-aware return quality.
LTCG Calculator for long-term realization planning.
STCG Calculator for short-term tax drag checks.