Tax Loss Harvesting in India: LTCG/STCG Workflow

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

1. Measure current performance at portfolio level using XIRR.
2. Estimate LTCG and STCG outcomes for candidate exits.
3. Simulate post-tax cash and reinvestment options.
4. 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.