New Delhi, Oct. 10 -- Investors may make profits on mutual fund investments while holding stocks that are trading at a loss. In such cases, selling loss-making stocks could help reduce their tax liability by offsetting capital losses against eligible capital gains.

Short-term capital losses can be set off against both short-term and long-term capital gains, whereas long-term capital losses can be set off only against long-term gains. These rules apply subject to the relevant income-tax provisions.

Yes, offsetting capital losses from the sale of listed shares is allowed but only against equity-oriented mutual funds.

A mutual fund scheme is classified as an equity mutual fund when it invests more than 60% of its total assets in the equit...