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Short term capital loss can be set off against any capital gain. Long term capital loss can be set off only against long term gain. Unadjusted capital loss can be carried forward for 8 years if the return is filed by the due date.
ITR
Setting off and carrying forward capital losses
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Provisions
Sec 70 (now Sec 108); Sec 74 (now Sec 111); Sec 80 (now Sec 121); Sec 71 (now Sec 109)
Analysis
Say you have short term loss of ₹80,000 and long term gain of ₹2,00,000; the loss reduces the gain to ₹1,20,000, which is within the ₹1,25,000 exemption. A long term loss cannot reduce a short term gain. Capital losses cannot be set off against salary or other heads. Fill Schedule CFL carefully, as next year's set off depends on it.
Close
- Separate gains and losses into short and long term.
- Set off short term loss first against short term gain, then long term.
- Set off long term loss only against long term gain.
- Carry the balance in Schedule CFL if filing on time.
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