Tax Loss Harvesting Explained: SEBI’s TLH Code
Why in the news
SEBI brought in a Tax Loss Harvesting Code in September 2025 to label loss-booking trades.
Concept
- Investors sell at a loss to cut tax on gains elsewhere.
- They may later buy similar, not identical, securities to keep the portfolio mix.
TLH Code
- Brought by SEBI to streamline securities transfer and reporting.
- Separates genuine transfers from loss-driven ones.
| Benefit | Meaning |
|---|---|
| Standardisation | Common identifier across brokers, exchanges, depositories |
| Transparency | Tax authorities spot loss-only trades |
| Investor ease | Legitimate benefits claimed without confusion |
| Less litigation | Fewer disputes on intent |
Example
- Stock A loss ₹50,000, Stock B profit ₹70,000: tax on only ₹20,000.
Exam angle
- Regulator: SEBI.