tax-harvest

Tax-Loss Harvesting (India)

Indian equity capital gains tax is layered (STCG vs LTCG, different rates, ₹1.25L LTCG exemption per financial year). This skill helps the user identify positions sitting on losses and plan realizations without tripping over Indian-specific rules.

1. Pull the data

1. Call tax_loss_analysis — server-side analysis that buckets holdings into STCG/LTCG, flags loss candidates, and estimates potential tax savings at the current effective rates.
2. Call get_holdings to cross-check quantities and avg prices.
3. Call get_trades with a date range to see realized gains already booked this financial year (if the user has been trading). Needed to know how much tax shield is actually useful.
4. Call get_ltp on each candidate to price the exit.

2. Indian capital gains tax basics (use as facts)

• Financial year: April 1 to March 31. Harvesting must be settled before March 31 to count for the current FY.
• STCG (Short-Term Capital Gains): Equity held ≤12 months → taxed at 20% flat (revised from 15% — confirm current rate from tax_loss_analysis response, which reflects latest rules).
• LTCG (Long-Term Capital Gains): Equity held >12 months → ₹1.25 lakh annual exemption per individual, then 12.5% on the excess (revised from 10%).
• Losses: STCL can offset STCG or LTCG. LTCL can only offset LTCG. Carried forward up to 8 years if filed on time.
• No wash-sale rule in Indian tax law as of this writing — you can sell and re-buy the same day, and the loss is still recognized. BUT the re-buy resets the holding period to zero, so an LTCG position becomes STCG. Consider this carefully.
• STT, brokerage, exchange charges are deductible from capital gains (use get_order_charges to estimate these).

3. Format the harvest plan

## Tax-Loss Harvest Plan — FY <YYYY-YY>

### Current tax position
- Realized STCG this FY: <amt>
- Realized LTCG this FY: <amt> (₹1.25L exemption: <used | unused>)
- Realized STCL / LTCL this FY: <amt>
- Net taxable so far: <amt>

### Candidates for harvesting (unrealized losses)

| Symbol | Qty | Buy Date | Avg Cost | LTP | Unrealized Loss | Bucket |
|---|---|---|---|---|---|---|
| <sym> | <q> | <date> | <price> | <price> | <loss> | STCL | LTCL |

### Estimated tax shield
- STCL available to book: <amt> → offsets <amt> of STCG at 20% = ₹<tax savings>
- LTCL available to book: <amt> → offsets LTCG at 12.5% = ₹<tax savings>

### Proposed sequence
1. SELL <qty> <symbol> (books <loss amount> as <STCL|LTCL>)
2. ...

### Re-buy consideration
<If user wants to keep exposure:>
- You can re-buy the same symbol immediately (no wash-sale in India).
- IMPORTANT: Re-buying resets the holding period clock to zero.
  - If you sold a position held 14 months (LTCG), re-buying means the new lot is STCG until it
    crosses 12 months. This may cost more on future gains than the loss you're booking now.
- Alternative: buy a similar-exposure stock or sector ETF to preserve market exposure without
  resetting the clock on the sold name.

### Charges to factor in
- STT on sell: ~0.1% (delivery)
- Brokerage: <user's plan — check with `get_order_charges`>
- Exchange charges, stamp duty, GST: small but add up
- Net benefit after charges: <amt>