Under tax farming, the responsibility to collect tax is shifted from government to private citizens, groups, associations, etc. This technique is generally used by large investors and High Networth Individuals (HNIs). Let’s assume one is holding a stock that is witnessing its lowest for the last 11 months. In case that person is already having short term gains during the year, he can book loss on this stock and re-purchase it after a few days. That way he would hardly lose anything in terms of market value but the notional loss is converted into an actual loss and can be used to reduce the overall tax liability.