Home/ Markets / Stock Markets/  Income tax calculator: How loss in Adani group shares can be used to reduce tax during ITR filing

Income tax calculator: Adani group stocks witnessed heavy sell off after the Hindenburg Research report raised concern over the group companies' debt. However, for taxpayers who still hold Adani group stocks in their portfolio, there is an opportunity to save money meant for income tax outgo in the current assessment year (AY). How so? By using the loss harvesting tool. If investors want to hold the Adani stocks further - they can book loss in any bounce back and buy the stock once again, after it falls from the loss booking levels.

By doing this loss harvesting practice, Adani group stock holders would be able to minimise their income tax outgo by setting off their loss in Adani group stocks with the substantial gains that they have received from other stocks in the current fiscal. This tax loss harvesting tool can be used for all loss making stocks.

Income tax rule on loss harvesting

Highlighting the income tax rules in regard to loss harvesting, Vinit Khandare, CEO & Founder at MyFundBazaar said, "Given the weakness in the equity market, the Indian stock market has been under sell-off pressure for the last six sessions – turned into a big opportunity by the investors who pay income tax. They can reduce their income tax outgo through loss harvesting. If an income taxpayer has managed substantial gains in this financial year, he/she can book losses in their stock holdings that are quoting below their average buying price and set off the capital loss against the capital gains while filing their income tax return (ITR) for the financial year – help the investor reduce the risk of further losses in a weak market as well."

However, Vinit Khandare said that while using this loss harvesting option, one should remember that short-term losses can be set off against short-term and long-term gains but long-term losses can only be set off against long-term gains. Therefore, selling the right kind of stock holdings is essential.

Opportunity for Adani group shareholders

On how Adani group shareholders can use this 'loss harvesting' tool to reduce their income tax outgo during ITR filing for AY 2023-24, Ravi Singhal, CEO at GCL Broking said, "As per the income tax rules, an income tax payer can set off one's capital losses against the substantial capital gains received in a financial year. Hence, if a stock market investor has received substantial capital gains during the current fiscal, then they can sell Adani group stocks and book loss. As Adani group stocks are highly volatile, they should book loss on rise and again enter when it undergoes profit-booking and comes below the loss booking level."

By using this 'loss harvesting' tool, Adani group stockholders can off set these booked losses with their gains from other stocks in their portfolio. Ravi Singhal of GCL Broking said that the income tax saver tool can be use for other loss making stocks as well.

Adani group stock turned circuit to circuit stocks after the Hindenburg Research report alleged Adani group management for 'manipulating stock prices.' Amid Gautam Adani-Hindenburg row, Adani Enterprises share price has fallen from 3,442 to 1,600 apiece levels, losing more than 50 per cent in less than one month time.

Adani Ports share price has fallen from 761 to 586 per share levels in this time while Adani Green Energy shares have fallen from 1,916 to 567 apiece levels.

ACC share price has corrected from around 2,335 apiece levels to 1,838 per share levels whereas Ambuja Cements share price has went down from near 500 to 355 per share levels.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Asit Manohar
Chief Content Producer at Live Mint Digital Team
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Updated: 21 Feb 2023, 12:21 PM IST
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