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Set off of Long Term Capital Loss

ROHIT GARG (ACCOUNTANT) (28 Points)

17 April 2011

Dear Friends,

i am curious to know why Long Term Capital Loss is not permitted to Set-Off aginst Short Term Capital Gain.

if some one has answer to suffice my question, please mitigate it and send me the solution at my email ID rgargkkr @ gmail.com

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(Guest)

Originally posted by : ROHIT GARG
	Dear Friends, i am curious to know why Long Term Capital Loss is not permitted to Set-Off aginst Short Term Capital Gain. if some one has answer to suffice my question, please mitigate it and send me the solution at my email ID rgargkkr @ gmail.com

The reason is that setting off long-term loss against short-term gains created a sort of tax arbitrage since STCG is taxable at a higher rate than LTCG. Therefore, it has been provided by the law that LTCL shall only be set off against taxable LTCG.

Yeshwanth (Chartered Accountant) (145 Points)
Replied 17 April 2011

It is only for the reason that people escape the tax liability of 30% (For Short Term Capital Gains) by offsetting the capital loss of LT which the income would have been taxed only @ 20 %

ROHIT GARG (ACCOUNTANT) (28 Points)
Replied 17 April 2011

but sir, tax on short term capital is at either normal rate of tax or 15% whereas Long Term Capital Gain is either exempt from tax or attracts 20% tax onus.

then how you can say that there is higher tax rate on STCG instead of LTCG

SIR, the proposition suggested by you eigher could not assimilate with me or this is inchoate.

please elaborate in detail.