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1 lakh deduction Equity MFs, STT paid - ITR2 AY 2020-21


I have STT paid Equity Mutual Funds (MFs) LTCG of 40000/-. I have carry forward losses (CFL) from earlier years of more than 4 lakhs. About 2 lakhs of this CFL gets applied to LTGC arising from debt MFs but we will keep this part out of this discussion for simplicity.

When I enter this data, the Java version of the ITR2 deducts the Equity based LTCG from the CFL also and calculates a NIL tax for the LTCG. In the process my CFL for future years has been reduced by an extra 40,000 and the 100,000/- max deduction for Equity based LTCG NOT applied.

I removed the CFL entry and then the Java version does apply the 100,000/- max deduction and correctly calculates the tax due for Equity based LTCG as NIL.

Q: Which deduction should get applied first for Equity based LTCG viz. the CFL or the 100,000/- max deduction. I would like to carry forward as much CFL as possible for future years and hence would like to see the 100,000/- max deduction applied first. If this is possible, what may I be doing wrong in filing the ITR2?. Please help.



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