- Sensex and Nifty fell sharply due to rising crude and Middle East conflict fears
- Brent crude surged nearly 60% in a month, hitting almost $116 per barrel
- Tax gain harvesting lets investors book gains within Rs 1.25 lakh exemption limit
Your portfolio is bleeding from war driven market chaos and March 31 could decide whether you lose even more money or claw some of it back through tax moves.
On Monday, Sensex and Nifty plunged for a second straight session as surging crude prices and an escalating Middle East conflict rattled investor confidence, triggering broad-based selling across sectors.
At 9.18 am, the Sensex dropped nearly 1,000 points while the Nifty slipped over 1.2 percent, with declines sharply outpacing advances. The selloff tracked a spike in oil, with Brent crude jumping to nearly $116 a barrel and logging a 60 percent monthly surge. LIVE UPDATES
The US-Israel conflict with Iran has entered its fifth week, expanding across the region, with fresh attacks raising fears of supply disruptions along key shipping routes near the Red Sea.
For investors watching their portfolios shrink, the timing is critical. The same volatility dragging markets lower can be used to reduce tax outgo before the financial year closes.
Tax gain harvesting allows investors to lock in profits without triggering tax, as long as long term capital gains remain within Rs 1.25 lakh. By selling and reinvesting equity shares or mutual funds held for over 12 months, investors can reset their cost base and potentially save up to Rs 15,625.
The strategy is straightforward. Book gains within the exemption limit, then buy back the same assets to maintain allocation while improving future tax efficiency.
Tax loss harvesting offers another lever. Investors can sell loss making investments to offset gains, directly reducing taxable income.
For example, a Rs 50,000 gain paired with a Rs 20,000 loss cuts taxable gains to Rs 30,000, lowering the final tax bill.
But these strategies are not cost free. Charges such as Securities Transaction Tax, brokerage, stamp duty and exit loads can add up with frequent trades, reducing net returns.
Chartered accountant Suresh Surana warns that investors often ignore these hidden costs while focusing only on tax savings. He says understanding expenses and keeping them low is key to making these strategies effective over time.
Tax loss harvesting (using losses to cut your tax)
Identify investments that are:
- Currently at a loss, and
- You are comfortable selling (even if only temporarily).
Before March 31:
- Sell some or all of these loss-making positions so the loss becomes realised.
Use realised capital losses to:
- Set off against current-year capital gains (long-term losses against long-term gains; short-term losses can be set off against both, as per rules).
- Carry forward any remaining eligible loss to future years (subject to filing and conditions).
Example:
- Long-term gain: Rs 50,000
- Long-term loss: Rs 20,000
- Net LTCG: Rs 30,000 > you pay tax only on Rs 30,000, not Rs 50,000.
If the investment still fits your strategy, you can:
Buy back the same or a similar asset after selling, being mindful of timing, costs, and any anti-avoidance concerns.
Practical checklist before you do it
Get your capital gains statement from your broker / RTA / CAMS / Kfintech.
Classify all transactions by:
- Short-term vs long-term.
- Equity vs debt vs other asset classes.
Check:
- How much of the 1.25 lakh LTCG exemption you have already used this year.
- Whether you have any brought-forward capital losses that must be set off first.
Run the numbers:
If tax saved < (STT + brokerage + stamp duty + exit load + bid-ask impact), skip the trade.
For large amounts or complexity (multiple brokers, F&O, ESOPs, foreign assets):
Consult a CA or tax professional before executing the strategy.
