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What does an 18-month study of residents on a housing estate in southern England tell us about living with debt? Laurie Taylor talks to Ryan Davey from Cardiff University about his new book The Personal Life of Debt – Coercion, Subjectivity and Inequality in Britain, which tries to understand how debt affects people emotionally as well as economically.

Laurie is also joined by Sarah Kerr (LSE International Inequalities Institute), whose book, Wealth, Poverty and Enduring Inequality – Let’s Talk Wealtherty, investigates the stubborn persistence of inequality in the UK. Kerr argues that the gap between top and bottom earners has become entrenched and normalised across generations.

Producer: Natalia Fernandez

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U.S. gasoline prices have now climbed 23.5% since the war began, climbing to a national average of $3.68 a gallon on Saturday. The global price of oil has surged even more sharply, rising 40% over the same period to $103.14 a barrel on Friday. Historically, gas prices tend to lag behind shifts in crude oil costs, suggesting further increases could be on the horizon.

Sensex and Nifty have seen a massive selloff amid the raging Iran-Israel war, wiping out nearly Rs 34 lakh crore from the total market capitalisation of BSE in March so far. As bears dominate the markets, investors may consider tax harvesting as a way to save on taxes.

Tax harvesting involves two methods tax loss harvesting and tax gains harvesting. Investors are liable to pay capital gains tax on equities only when the shares are sold. While taxes are payable on gains, investors also have an opportunity to save taxes if they incur losses.

What is tax loss harvesting?

Tax loss harvesting involves selling equities that are at a loss and then carrying forward the loss to offset gains in future years. The loss can be carried forward for up to eight assessment years from the assessment year in which it was incurred.

Example: An investor named John sold shares of X Company on Friday (bought in February last year) and made a profit of Rs 5 lakh. Since the holding period is more than 12 months, this is treated as a long-term capital gain (LTCG).

Breaking down his tax liability: Rs 1.25 lakh of the profit is exempt, while the remaining Rs 3.75 lakh is taxed at a flat rate of 12.5%. John wants to reduce his tax liability using tax loss harvesting.

John also owns shares of Y Company, which have fallen significantly below his purchase price. By selling Y shares and incurring losses of Rs 3.75 lakh, his overall tax liability for the year is reduced to zero, as the losses offset the gains from X shares.
“This method is called tax loss harvesting. Normal human tendency is to sell shares that are profitable and hold shares that are in loss. Tax loss harvesting is about selling shares incurring substantial loss so that it can offset profits already made. Unless you sell the shares, you cannot claim the loss under Income Tax law,” said tax and investment expert Balwant Jain.For short-term capital gains (STCG), i.e., profit from selling shares held for less than 12 months, the tax is 20% flat and does not enjoy the Rs 1.25-lakh exemption like LTCG. You can book losses up to the gains made during the year to reduce STCG liability, Jain explains.

What if the stock you want to sell for tax loss harvesting is expected to rally in the future? In John’s example, if he believes Y shares will rise, he can still book a loss and buy the same stock in a different trading account on the same day. If he has only one demat account, he can repurchase the stock the next day. However, intraday sale and purchase on the same day using the same account will not qualify for tax loss harvesting.

What is tax gains harvesting

Consider an investor named Harry. He holds 100 shares of A Company for more than 12 months. Today, the total profit from selling all shares would be Rs 3 lakh.

If Harry sells only 41 shares and continues to hold the rest, his LTCG reduces to Rs 1.23 lakh, which falls under the exemption limit, resulting in zero tax liability. This strategy is called tax gains harvesting.

In the July 2024 budget, Finance Minister Nirmala Sitharaman revised STCG and LTCG rates:

• STCG: increased from 15% to 20% for shares held less than 12 months.
• LTCG: increased to 12.5% on gains exceeding Rs 1.25 lakh for shares held 12 months or more.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)