18 July 2024
Yes, you can adjust your short-term capital gains (STCG) with both long-term capital losses (LTCL) and short-term capital losses (STCL). Here’s how the adjustment works:
### Adjustment of Short-Term Capital Gains (STCG):
1. **Adjustment with Long-Term Capital Loss (LTCL)**: - Short-term capital gains can be adjusted against long-term capital losses. This means if you have incurred losses from the sale of long-term assets (held for more than 3 years), those losses can be used to offset your short-term capital gains. - The net result after adjusting LTCL against STCG will determine your taxable short-term capital gains for the year. - Any remaining LTCL after offsetting against STCG can be carried forward for up to 8 assessment years immediately following the assessment year in which the loss was first computed.
2. **Adjustment with Short-Term Capital Loss (STCL)**: - Short-term capital gains can also be adjusted against short-term capital losses. If you have incurred losses from the sale of short-term assets (held for 3 years or less), those losses can offset your short-term capital gains. - Similar to LTCL, any remaining STCL after offsetting against STCG can be carried forward for up to 8 assessment years for future offset against STCG.
### Example Scenario:
- **Short-Term Capital Gains**: You earned Rs. 1,00,000 as STCG from the sale of shares. - **Long-Term Capital Loss**: You incurred Rs. 50,000 as LTCL from the sale of a property. - **Short-Term Capital Loss**: You incurred Rs. 30,000 as STCL from the sale of other shares.
#### Adjustment Calculation: - **First, adjust STCG with LTCL**: - STCG of Rs. 1,00,000 - LTCL of Rs. 50,000 = Rs. 50,000 (Net STCG after adjustment with LTCL)
- **Next, adjust remaining STCG with STCL**: - Rs. 50,000 (Net STCG after LTCL adjustment) - STCL of Rs. 30,000 = Rs. 20,000 (Taxable short-term capital gains)
In this example, after adjusting both LTCL and STCL against STCG, the remaining taxable short-term capital gains would be Rs. 20,000.
### Conclusion: Adjusting short-term capital gains with long-term and short-term capital losses is a standard practice under the Income Tax Act. This helps in optimizing tax liabilities by offsetting gains with losses incurred within the same financial year, thereby reducing the overall taxable income from capital gains. Always ensure to maintain proper records and consult with a tax advisor or chartered accountant for accurate computation and reporting of capital gains and losses based on your specific financial situation.
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