Tax Loss Harvesting for Indian Investors: Complete Guide to Saving Tax on Stock and ETF Portfolios

Tax loss harvesting is the most underutilised legal tax optimisation strategy available to Indian investors with international portfolios — and it is especially powerful in India because the Income Tax Act has no wash sale rule. In the United States, you must wait 30 days after selling a losing investment before buying back "substantially identical" securities, or the loss is disallowed. In India, no such restriction exists. You can sell CSPX at a loss this morning and buy it back this afternoon, and the capital loss is fully valid.

For Indian investors holding US stocks from RSU vesting, UCITS ETF portfolios, or any mix of international equities, this creates meaningful annual tax saving opportunities that compound significantly over a decade.

This guide covers the complete mechanics: India's capital loss set-off and carry-forward rules, why the absence of a wash sale rule is so important, the ETF swap strategy for UCITS portfolios, how to harvest losses across RSU lots, how to document and file in Schedule CG of ITR-2, and the worked numbers that show what this is actually worth over a 10-year holding period.

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The Capital Gains and Loss Framework in India

How Capital Gains Are Taxed for International Investments

For Indian residents holding foreign equity (US stocks, Irish UCITS ETFs):

Asset type	Holding period	Gain type	Tax rate
US-listed stocks (foreign equity)	< 24 months	Short-term (STCG)	Slab rate (up to 30%)
US-listed stocks (foreign equity)	≥ 24 months	Long-term (LTCG)	12.5% (Section 112)
Irish UCITS ETFs (foreign equity)	< 24 months	Short-term (STCG)	Slab rate
Irish UCITS ETFs (foreign equity)	≥ 24 months	Long-term (LTCG)	12.5% (Section 112)
Indian-listed equity funds (ETFs)	< 12 months	Short-term	20% (Section 111A)
Indian-listed equity funds (ETFs)	≥ 12 months	Long-term	12.5% (Section 112A)

Note: Section 112 (12.5%, no indexation) applies to foreign equity — US stocks, UCITS ETFs, ADRs. Section 112A (12.5%, no indexation) applies to Indian-listed equity that went through Indian exchanges and paid STT. The 24-month vs 12-month distinction is critical.

Capital Loss Set-Off Rules Under the Income Tax Act

Section 70 and 71 govern intra-year set-off:

Short-Term Capital Loss (STCL) — from international assets:

• Can offset STCG from any asset class: ✓
• Can offset LTCG from any asset class: ✓ (STCL is the most flexible loss)

Long-Term Capital Loss (LTCL) — from international assets:

• Can offset LTCG: ✓
• Cannot offset STCG: ✗

Priority of set-off: Set off losses against gains in the same category first (STCL vs STCG), then against the other category (STCL vs LTCG). This maximises tax savings — short-term gains taxed at slab rate benefit most from being offset.

Intra-year example:

• STCG from selling Apple shares early: Rs 2,00,000 (slab rate = Rs 60,000 tax at 30%)
• STCL from selling fallen NVIDIA RSU shares: Rs 1,50,000
• Net STCG after set-off: Rs 50,000 → tax = Rs 15,000
• Tax saved: Rs 45,000 in one year from one harvesting transaction

The 8-Year Carry-Forward: Why Filing on Time Is Non-Negotiable

Under Section 74, unabsorbed capital losses carry forward for 8 assessment years — provided the return for the loss year is filed on or before the ITR due date (typically July 31 for individuals not under audit; October 31 for those under audit).

The critical constraint: If you miss the ITR due date in the year the loss occurred, the carry-forward right is lost permanently. Late filing (using the belated return provisions under Section 139(4)) does not allow carry-forward of losses. Only timely returns preserve the carry-forward.

Practical implication: If you have unrealised losses in your portfolio near year-end (March) and have realised gains elsewhere, file your return by July 31 that year — no exceptions.

Carry-forward restrictions:

• STCL carried forward → can offset both STCG and LTCG in future years
• LTCL carried forward → can only offset LTCG in future years

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Why India's Absence of a Wash Sale Rule Matters

What the US Wash Sale Rule Does

Under US Internal Revenue Code Section 1091, if you sell a security at a loss and then purchase "substantially identical" securities within 30 days before or after the sale, the loss is disallowed. The disallowed loss is added to the cost basis of the repurchased securities.

Impact on US investors: You must either:

1. Wait 31 days before repurchasing → you are out of the market for 31 days, creating tracking error and potential opportunity cost
2. Buy a different-but-similar ETF that is not "substantially identical" → basis risk (the substitute may not perfectly track your original)

Impact on Indian investors: None. India has no equivalent provision. You can:

• Sell CSPX at a loss and buy CSPX back immediately
• Sell Apple shares at a loss and buy Apple back the same day
• Sell one RSU lot at a loss and maintain full exposure to the same stock

The only reason Indian investors typically use the ETF swap strategy (sell CSPX → buy VUAA) rather than buying back the same fund is to maintain optionality and avoid any theoretical interpretation risk — though current Indian law has no basis for disallowing the loss even if you buy back the identical security.

The Tax Alpha of No Wash Sale Rule

In the US, academic research on tax loss harvesting (notably from AQR, Vanguard, and Parametric) estimates TLH adds 0.4-1.5% per annum in after-tax returns for investors who harvest systematically — this is achieved despite the wash sale constraint.

In India, the absence of the wash sale rule means:

• No 31-day tracking error — you never have to leave your desired allocation
• You can harvest the same position multiple times within a year if volatility creates multiple loss windows
• You can harvest on the last trading day of the financial year (March 31) and repurchase immediately on April 1, locking in the loss with zero time out of the market

The Indian structural advantage is real and systematically larger than the US equivalent.

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The ETF Swap Strategy for UCITS Portfolios

Why Use a Different ETF Instead of the Same One

Even though India has no wash sale rule, using a slightly different ETF when harvesting has several advantages:

1. Avoids any future regulatory ambiguity: If the Indian tax code is ever amended to include a wash sale provision, having used a different security protects you retroactively.
2. Maintains exposure with basis reset: You fully maintain your market exposure (same index, same geography) while establishing a new, lower cost basis.
3. Allows comparison: Owning both funds temporarily makes it easy to see tracking difference.
4. No transaction cost disadvantage: IBKR commissions are low enough that the round-trip (sell old, buy new) costs approximately USD 2-4, negligible against tax savings.

The S&P 500 Swap Pairs

Sell	Buy immediately	Index tracked	ISIN change
CSPX (iShares, 0.07%)	VUAA (Vanguard, 0.07%)	S&P 500	IE00B5BMR087 → IE00B3XXRP09
VUAA (Vanguard, 0.07%)	CSPX (iShares, 0.07%)	S&P 500	Reverse swap
CSPX	SPXS (Invesco, 0.05%)	S&P 500	IE00B3XXRP09 → IE00B3YCGJ38

All three track S&P 500. Swapping between them maintains your US large-cap exposure while resetting the cost basis.

The MSCI World Swap Pairs

Sell	Buy immediately	Notes
IWDA (iShares, 0.20%)	SWDA (iShares USD-hedged, 0.20%)	Same index, currency hedge difference
IWDA (iShares, 0.20%)	CW8 (Amundi, 0.12%)	Same MSCI World index; different provider, different domicile (LU)
SWDA (iShares)	XDWD (Xtrackers, 0.19%)	Both MSCI World; different providers

The All-World Swap Pairs

Sell	Buy immediately	Notes
VWRA (Vanguard FTSE All-World, 0.22%)	SSAC (iShares MSCI ACWI, 0.20%)	Nearly identical exposure; FTSE vs MSCI index methodology differs slightly; S. Korea treatment differs
SSAC (iShares MSCI ACWI)	VWRA (Vanguard FTSE All-World)	Reverse

Important caveat on MSCI ACWI vs FTSE All-World: These indices have minor methodology differences (South Korea classified as developed in FTSE, emerging in MSCI; small-cap inclusion differs). Basis risk is very low but non-zero. For tax harvesting purposes, either direction is valid.

Step-by-Step ETF Swap Execution on IBKR

1. Log in to IBKR and identify your ETF positions with unrealised losses
2. In the Portfolio view, sort by "Unrealised P&L" to find losing positions
3. Place a market or limit sell order for the losing ETF (CSPX in this example)
4. Wait for the sell order to fill (LSE operates 8am-4:30pm London time)
5. Immediately place a buy order for the substitute ETF (VUAA) for the same approximate dollar value
6. The loss is realised; your S&P 500 exposure is fully maintained
7. Record: date of sale, sale price, original cost basis, loss amount realised, and what you bought as the substitute

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Harvesting RSU Lots: The Special Case

Why RSUs Create Natural Harvesting Opportunities

RSU vesting creates multiple cost bases — each vest date creates a new lot with the vest-date FMV as the acquisition cost. If the stock subsequently falls, later lots purchased (or vested) at higher prices sit alongside earlier lots at lower prices. You can selectively sell the high-cost lots to harvest losses while retaining the low-cost lots.

The RSU lot landscape after 8 quarters of vesting at a hypothetical US tech company:

Vest date	Shares	Vest FMV (cost basis)	Current price ($180)	Unrealised gain/(loss)	Holding
Jan 2024	50	$140	$180	+$2,000	30 months — LTCG
Apr 2024	50	$145	$180	+$1,750	27 months — LTCG
Jul 2024	50	$220	$180	−$2,000	24 months — LTCG
Oct 2024	50	$210	$180	−$1,500	21 months — STCG
Jan 2025	50	$195	$180	−$750	18 months — STCG
Apr 2025	50	$175	$180	+$250	15 months — STCG
Jul 2025	50	$160	$180	+$1,000	12 months — STCG
Oct 2025	50	$170	$180	+$500	9 months — STCG

Harvesting opportunity: Sell the Jul 2024 lot (LTCL of $2,000) and Oct 2024 lot (STCL of $1,500) to realise Rs 2,90,500 in capital losses (at $185 exchange rate ≈ Rs 6.4 lakh in losses), which can offset gains elsewhere.

After selling, immediately buy back equivalent shares — either the same company stock or, if the position was already large, a sector ETF (e.g., an information technology UCITS ETF) to maintain tech exposure while harvesting.

Identifying Which Lots to Sell

Specific Lot Identification: In IBKR, you can specify which lot to sell when you place a trade. Go to the order ticket → select "Tax Lot" → choose specific lots by date. This is critical — IBKR defaults to FIFO (oldest lots first) if you do not specify, which may not be optimal for tax purposes.

Harvesting priority:

1. Highest-loss STCL lots first: STCL offsets both STCG and LTCG — most flexible
2. High-loss LTCL lots second: Can only offset LTCG; less flexible but still valuable
3. Avoid selling lots with large unrealised gains: Triggering gains that you are not forced to realise defeats the purpose

The RSU Buyback Constraint

If you sell RSU shares of your own employer's stock after harvesting the loss, check your company's insider trading policy and any trading window restrictions. Many large US companies require pre-clearance for stock sales. Selling at a loss is still a sale and typically subject to the same trading window rules as any other sale.

If your trading window is closed, you cannot harvest those lots — wait for the next open window.

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Worked Example: Rs 25 Lakh Portfolio, 3-Year Harvest Sequence

Portfolio Setup

Rahul is an Indian resident working at a US company's Bangalore office. He holds the following at the start of FY 2025-26:

RSU holdings (received post-vest, after employer TDS):

• 200 shares of AAPL, vested Jan 2024 at $185/share (cost basis Rs 1,54,000/share ≡ Rs 30,80,000 total at 83 FX)
• 200 shares of AAPL, vested Jul 2024 at $230/share (cost basis Rs 19,09,000 total at 83 FX)

UCITS ETF holdings:

• 150 units of CSPX, purchased March 2024 at $485/unit (cost basis Rs 60,49,000 total)
• 80 units of VWRA, purchased November 2024 at $120/unit (cost basis Rs 7,99,200 total)

Current prices (March 31, 2026):

• AAPL: $170 (down from $230 vest FMV; up from $185 vest FMV)
• CSPX: $450 (down from $485 purchase price)
• VWRA: $128 (up from $120 purchase price)

FY 2025-26 Harvest Execution (March 30, 2026)

Step 1: Identify losses

• AAPL Jul 2024 lot: bought at $230, now $170 → loss of $60/share × 200 = $12,000 ≈ Rs 10,08,000 (at 84 FX) → LTCL (held 20 months from Jul 2024 → actually STCL since < 24 months)
• CSPX: bought at $485, now $450 → loss of $35/unit × 150 = $5,250 ≈ Rs 4,41,000 → STCL (held 24 months exactly from March 2024 — actually right at the boundary; if it was March 2024 purchase, this is exactly 24 months by March 2026, qualifying for LTCL treatment)

Step 2: Harvest

• Sell all 200 AAPL Jul 2024 lot shares → STCL realised: Rs 10,08,000
• Sell all 150 CSPX units → LTCL realised: Rs 4,41,000
• Immediately buy back equivalent exposure:
  • Repurchase AAPL shares (same day — no wash sale rule applies)
  • Buy 150 units of VUAA (S&P 500 equivalent, different fund)

Step 3: Tax impact in FY 2025-26

Rahul also had the following gains in FY 2025-26:

• Sold 100 units of an Indian equity mutual fund (held 18 months): STCG Rs 3,00,000 (taxed at 20% = Rs 60,000)
• Sold 50 shares of AAPL Jan 2024 lot (held 27 months) at $170: sale price $8,500, cost basis $9,250 — actually a loss too. But let's say instead he sold some VWRA in November for a gain of Rs 1,50,000 LTCG.

Set-off computation:

Gain/Loss	Amount	Type
Mutual fund sale gain	+Rs 3,00,000	STCG
VWRA sale gain	+Rs 1,50,000	LTCG
AAPL Jul 2024 lot harvest	−Rs 10,08,000	STCL
CSPX harvest	−Rs 4,41,000	LTCL

STCL set-off: Rs 10,08,000 STCL against Rs 3,00,000 STCG → fully absorbed. Remaining STCL: Rs 7,08,000. Apply remaining STCL against LTCG: Rs 7,08,000 against Rs 1,50,000 LTCG → fully absorbed. Remaining STCL: Rs 5,58,000.

LTCL set-off: Rs 4,41,000 LTCL — no LTCG remaining to set off against. Carried forward.

Tax result in FY 2025-26:

• Net taxable capital gains: Rs 0 (all absorbed)
• STCL carried forward: Rs 5,58,000
• LTCL carried forward: Rs 4,41,000

Tax saved:

• On STCG Rs 3,00,000 at 20%: Rs 60,000 saved
• On LTCG Rs 1,50,000 at 12.5%: Rs 18,750 saved
• Total: Rs 78,750 saved in FY 2025-26 alone

FY 2026-27 and Beyond: The Carry-Forward Advantage

The Rs 5,58,000 STCL and Rs 4,41,000 LTCL carried into FY 2026-27 can absorb future gains. If Rahul realises Rs 5,58,000 STCG in FY 2026-27 (from RSU vesting appreciation), the carried STCL fully absorbs it, saving Rs 1,11,600 in tax (at 20% STCG rate) — from a harvesting action taken in FY 2025-26.

Over 8 years of carry-forward: A Rs 10 lakh harvested loss pool, used systematically, can save Rs 1.25-3 lakh per year depending on the mix of STCG and LTCG being offset. The compounded value of those annual savings, reinvested, can represent 0.5-1.5% per annum of additional portfolio return.

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The Harvesting Calendar: When to Harvest During the Year

The March Window

The end of the Indian financial year (March 31) is the most critical harvesting window. In the two weeks before March 31:

1. Review all unrealised losses in the portfolio
2. Identify which losses are meaningful enough to harvest (rule of thumb: Rs 50,000+ minimum loss to make transaction costs worthwhile)
3. Execute swaps or repurchases before March 31
4. Ensure settlement completes before March 31 (US stocks settle T+1; LSE-listed ETFs settle T+2 — plan accordingly; for LSE ETFs, you need to trade by March 28 at the latest for T+2 settlement by March 31)

Settlement timing for international assets:

• US stocks (NYSE/NASDAQ): T+1 settlement — trade by March 30 for March 31 settlement
• LSE-listed UCITS ETFs: T+2 settlement — trade by March 28 for March 31 settlement (adjusting for any UK bank holidays)
• Euronext-listed ETFs: T+2 — similar timing

Intra-Year Opportunities: Don't Wait for March

Significant market drawdowns create harvesting opportunities throughout the year. If the S&P 500 falls 10-15% in August and your CSPX position shows a loss, harvesting in August and swapping to VUAA locks in the loss for the current financial year. If the market recovers by March, waiting would have eliminated the opportunity.

The opportunistic harvesting rule: Harvest whenever a loss exceeds Rs 1 lakh (or a threshold you set), not just at year-end. Multiple harvesting events in the same year compound the benefit.

Tracking Losses and the New Cost Basis After Swap

Every harvest creates a new cost basis for the substitute position. After swapping CSPX → VUAA:

• Old CSPX units: sold, loss realised, no longer in portfolio
• New VUAA units: cost basis = purchase price on harvest day
• If VUAA subsequently rises, you have a gain from the new (lower) cost basis

Tracking requirement: Maintain a spreadsheet or use IBKR's cost basis tracking feature to record, for every position:

• Acquisition date
• Cost basis in USD
• INR equivalent at acquisition FX rate
• Whether this is a reinvested position (post-harvest swap)

IBKR provides a Tax Lot detail view (Portfolio → Tax Lot Exposure) which shows every lot, its cost basis, and current unrealised P&L. Export this annually for your CA and ITR preparation.

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Losses on UCITS Accumulating ETFs: A Nuance

Accumulating UCITS ETFs (CSPX, VUAA, VWRA) reinvest dividends into NAV rather than distributing them. This means the NAV grows by the dividend amount each quarter. When you calculate your capital gain or loss on an accumulating ETF:

Cost basis for accumulating ETF: Your purchase price (what you actually paid IBKR for the shares). You did not pay any extra for the reinvested dividends — the fund does that internally.

Example:

• You bought 100 units of CSPX at $490/unit in January 2025. Total cost basis: $49,000.
• By March 2026 (15 months later), CSPX NAV is $460/unit (market declined; dividends reinvested but less than the decline).
• Unrealised loss: ($460 - $490) × 100 = −$3,000.

You can sell all 100 units, realise the $3,000 STCL (held < 24 months), and immediately buy VUAA at the equivalent value. Your cost basis for VUAA is $46,000.

The accumulating dividend reinvestment — because it happened inside the fund — does not create any additional Indian tax complexity. It is entirely embedded in the NAV. Your cost basis remains your original purchase price.

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Filing Harvested Losses in ITR-2 Schedule CG

The ITR-2 Structure for International Capital Gains

ITR-2 is the relevant form for Indian residents with capital gains from foreign assets (provided they have no business income). Schedule CG (Capital Gains) has separate sections:

• B2: Short-term capital gains (other than sections 111A) — for foreign equity STCG (slab rate)
• B3: Long-term capital gains (Section 112) — for foreign equity LTCG (12.5%)
• D: Losses of current year to be carried forward — where you declare losses not absorbed in the current year

How to Enter Each Lot

For each sold position, you enter:

• Description of asset (e.g., "CSPX — iShares Core S&P 500 UCITS ETF, 150 units")
• Date of purchase and date of sale
• Sale consideration in INR (converted at the exchange rate on the date of sale — use the RBI reference rate for that date)
• Cost of acquisition in INR (converted at the exchange rate on the date of purchase)
• Capital gain / loss: sale consideration minus cost

Exchange rate for INR conversion:

• Use the RBI reference rate for the specific transaction date, not a monthly average
• IBKR's tax documents show USD amounts; convert each transaction at the actual date's RBI rate
• Your CA will typically source these from RBI's FBIL rate history

Carrying Forward Losses: Schedule CFL

Schedule CFL (Carry Forward Losses) is where you declare the unabsorbed losses from the current year being carried into future years:

• Row for STCL under Section 74(1)
• Row for LTCL under Section 74(2)

These amounts are picked up by the ITR pre-fill system in subsequent years, so you can verify the figures in future returns.

Critical: You must file the ITR for the loss year on time (before the due date, not just before December 31 of the same year) for Schedule CFL losses to be valid. A belated return filed after the due date does not allow carry-forward of capital losses under the current Income Tax Act.

Schedule FA: Reporting the New Position

After a harvest swap (sold CSPX, bought VUAA), your Schedule FA disclosure in the subsequent financial year changes:

• You no longer hold CSPX (if sold entirely)
• You now hold VUAA — report under Schedule FA with the new ISIN, acquisition date, and cost

If you did a partial swap (sold some CSPX, bought VUAA), report the remaining CSPX at its original acquisition details and the new VUAA at the harvest-day acquisition details.

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When Tax Loss Harvesting Is Not Worth Doing

Small Losses: Transaction Cost Threshold

IBKR charges approximately USD 1-2 per trade (USD 0.005/share minimum $1). A round trip (sell + buy) costs approximately USD 2-4 total, or Rs 165-330. Below Rs 50,000 in harvestable loss, the tax saving (12.5% LTCG or 20% STCG) may not justify the effort and transaction cost. Rule of thumb: only harvest if the loss exceeds Rs 50,000.

Currency Gains Can Offset Apparent Stock Losses

UCITS ETFs are priced in USD (or GBP if bought on LSE). If the USD has strengthened against INR since your purchase, a decline in the USD price of an ETF may not represent an INR loss — the currency movement compensates.

Example: You bought CSPX at $490 when USD/INR was 82. Cost basis in INR: Rs 40,180. CSPX falls to $460, but USD/INR is now 87. Current value: Rs 40,020. Loss is only Rs 160 — negligible in INR despite the USD price decline.

Before harvesting any international position, calculate the INR gain/loss, not the USD gain/loss.

Near-LTCG Threshold: Hold Instead of Harvest

If a position is 3-4 months away from its 24-month LTCG threshold (converting slab-rate STCG to 12.5% LTCG) and it has unrealised gains, do not harvest — you would realise gains at a higher rate. Conversely, if a position with large gains is near the 24-month threshold, hold it specifically to convert to LTCG rather than selling.

The harvesting decision must be integrated with the LTCG holding strategy.

Positions With Large Future Gains: Basis Matters

If you sell a position to harvest a loss and the substitute position subsequently rises significantly, you will eventually pay tax on the larger gain from the new (lower) cost basis. TLH defers tax — it does not eliminate it. The benefit is the time value of the deferral, compounded over years. In a rising market, repeated harvesting and swapping can defer significant tax for 10-20 years.

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The 10-Year Tax Alpha: What Systematic Harvesting Is Worth

Assumptions

• Rs 50 lakh international equity portfolio (UCITS ETFs + RSU shares)
• 10% average annual gross return
• 1.4% annual dividend yield (embedded in accumulating ETF NAV)
• Annual harvesting opportunity: 30% of the portfolio faces a meaningful loss at some point in the year (based on rolling volatility of major indices)
• Average loss harvested per year: 5% of portfolio (Rs 2.5 lakh in year 1, growing with portfolio)
• Tax rate on gains without harvesting: blended 20% (mix of STCG and LTCG)

Estimated Annual Tax Savings

Year	Portfolio value	Loss harvested	Tax deferred	Reinvested saving
1	Rs 50L	Rs 2.5L	Rs 50,000	Rs 50,000
3	Rs 66L	Rs 3.3L	Rs 66,000	Rs 1,90,000 accumulated
5	Rs 80L	Rs 4.0L	Rs 80,000	Rs 3,70,000 accumulated
10	Rs 1.3Cr	Rs 6.5L	Rs 1,30,000/yr	Rs 9,50,000 accumulated

The Rs 9.5 lakh accumulated represents approximately 0.7% per annum in additional after-tax return over 10 years — entirely from systematic harvesting with zero change to market exposure or risk.

For portfolios above Rs 1 crore, or for investors with RSU income creating frequent short-term gains to offset, the annual harvesting benefit is proportionally larger.

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Summary: The Harvesting Checklist

Every March (before the 31st):

• Export IBKR tax lot report — identify all positions with unrealised losses in INR terms (not just USD)
• Calculate INR P&L for each position (convert at current FX rates)
• Identify harvest candidates: STCL positions first (most flexible offset), LTCL second
• Check that identified lots are not within 3-4 months of their 24-month LTCG threshold (if they are gains, not losses — this does not apply)
• Identify swap pairs (CSPX → VUAA, IWDA → CW8, etc.) and verify both are trading on LSE on harvest day
• Execute swaps by March 28 for T+2 settlement by March 31
• For US stocks: execute by March 30 for T+1 settlement
• Record all transactions: lot sold, proceeds, cost basis, loss amount, substitute purchased, new cost basis
• Verify total unrealised losses in ITR are equal to harvested losses plus any remaining unharvested losses

Every July (before the ITR due date):

• Give CA the complete tax lot data from IBKR for FY just ended
• Ensure Schedule CG is correctly populated with all lot-level transactions
• Verify Schedule CFL captures all unabsorbed STCL and LTCL for carry-forward
• File ITR-2 before July 31 — non-negotiable for carry-forward preservation

The single most important rule: File your return on time, every year. A missed deadline in any year destroys that year's carry-forward. Eight years of potential compounding from one harvest is lost permanently if you file late.