Tax harvesting
Equity gains up to ₹1.25L a year are tax-free. Use the allowance every year, or lose it. Rules for FY 2026-27.
Harvesting saves ₹2.1L in tax
By booking up to ₹1.25L of long-term gains every year and buying straight back, you realise ₹16.3L of gains tax-free over 15 years. When you finally sell, tax falls from ₹12.4L to ₹10.3L.
Tax when you sell
Selling everything after 15 years: ₹1.46Cr from ₹50L invested.
At most ₹16,250 saved per year, so it pays off over many years and needs gains to harvest.
Year-by-year table15 years
| Year | Value | Gains harvested | Cost basis after |
|---|---|---|---|
| 1 | ₹8,79,162 | ₹0 | ₹8,00,000 |
| 2 | ₹13,03,824 | ₹1,25,000 | ₹12,25,000 |
| 3 | ₹17,79,446 | ₹1,25,000 | ₹16,50,000 |
| 4 | ₹23,12,142 | ₹1,25,000 | ₹20,75,000 |
| 5 | ₹29,08,761 | ₹1,25,000 | ₹25,00,000 |
| 6 | ₹35,76,975 | ₹1,25,000 | ₹29,25,000 |
| 7 | ₹43,25,374 | ₹1,25,000 | ₹33,50,000 |
| 8 | ₹51,63,582 | ₹1,25,000 | ₹37,75,000 |
| 9 | ₹61,02,374 | ₹1,25,000 | ₹42,00,000 |
| 10 | ₹71,53,821 | ₹1,25,000 | ₹46,25,000 |
| 11 | ₹83,31,442 | ₹1,25,000 | ₹50,50,000 |
| 12 | ₹96,50,378 | ₹1,25,000 | ₹54,75,000 |
| 13 | ₹1,11,27,586 | ₹1,25,000 | ₹59,00,000 |
| 14 | ₹1,27,82,058 | ₹1,25,000 | ₹63,25,000 |
| 15 | ₹1,46,35,068 | ₹0 | ₹66,25,000 |
How this is calculated
At each year end, units held more than 12 months are sold up to the point where gains reach ₹1,25,000, then bought straight back. The gain is tax-free, and the units’ cost rises to today’s price, so that gain is never taxed again.
Bought-back units restart their 12-month clock. Exit loads, and the one or two days out of the market, aren’t modelled. The ₹1.25 lakh is per person across all equity sales in the year.
A guide for planning, not tax advice.