Loss Harvesting for Short Term Capital Gains

Loss harvesting can be used to offset short-term capital gains. If an investor has a ₹20,000 profit in stock ABC and a ₹60,000 loss in stock XVA, selling XVA on March 10th to book the ₹60,000 loss, then immediately buying it back on March 12th, results in a net capital gain of ₹20,000 (₹80,000 profit - ₹60,000 loss). This would incur a tax of ₹6,000 (30% of ₹20,000), rather than paying ₹6,000 (30% of ₹20,000) on the initial ₹20,000 profit, followed by a separate tax on the loss. However, if the intent is to save tax, the strategy is to book the loss to offset gains, with a plan to re-enter the stock later.