Tax harvesting: book gains tax-free every year.

How it is calculated

For equity mutual funds and listed shares held for more than 12 months, long-term capital gains up to the yearly limit (₹1.25 lakh under the rules from 23 July 2024) are tax-free; gains above it are taxed at 12.5% plus cess. The limit is per person per financial year and is lost if unused.

Harvesting means selling units with gains up to that limit and buying them back, so the gain is booked tax-free and your purchase cost goes up. Each year the calculator books gains up to the limit; when you finally sell, less gain is left to tax. Exit loads, brokerage and the time out of the market between selling and buying back are not included. Gains on debt funds bought after 1 April 2023 are taxed at your slab rate and do not get this benefit.