When we talk of profits on equity here, we are referring to net profits (net of losses). For the year 2018-19 if you are having capital gains of Rs.165,000 on your trading account and if you are having losses of Rs.40,000 on your equity mutual funds then you net LTCG will be Rs.125,000/- Of these, the first Rs.1 lakh will be tax free and you only pay tax of 10% on the balance of Rs.25,000 i.e. Rs.2500 as tax on capital gains. Remember, that capital losses can only be written off against capital gains and not against any other head of income. Since losses can be set off against profits, it logically follows that losses on equity and losses on equity funds can also be carried forward for a period of 8 years and written off against future long term capital gains. This will help you to reduce your tax payable.