Capitals gains set - off query
This query is : Resolved
23 November 2011
Question 1) Can Short Term Capital Loss from Equity (Shares or Mutual Funds) be set-off against Short Term Capital Gain from Gold , Property , etc & Vice Versa ?
Question 2) Can Short Term Capital Loss from Gold be set-off against Short Term Capital Gain from Property & Vice Versa ?
Question 3) Can Long Term Capital Loss from Gold or Jewellery be set-off against Long Term Capital Gain from Property & Vice Versa ?
Please can you explain your answer with examples ?
Question 2) Can Short Term Capital Loss from Gold be set-off against Short Term Capital Gain from Property & Vice Versa ?
Question 3) Can Long Term Capital Loss from Gold or Jewellery be set-off against Long Term Capital Gain from Property & Vice Versa ?
Please can you explain your answer with examples ?
23 November 2011
1. Short term capital loss can be set off against short term capital gain or long term capital gain of any kind. The nature of the asset transferred is not relevant.
2. Long term capital loss can be set off ONLY against long term capital gain. Again the nature of asset transferred is not relevant.
Long term capital loss cannot be set off against short term capital gain.
2. Long term capital loss can be set off ONLY against long term capital gain. Again the nature of asset transferred is not relevant.
Long term capital loss cannot be set off against short term capital gain.
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24 November 2011
Can Long Term Capital Loss which had occurred due to Loss on Sale of Shares (or Equity-Oriented Mutual Funds)be set-off against Long Term Capital Gain on Sale of Gold or Property ?
18 July 2024
Yes, under Indian Income Tax laws, Long Term Capital Losses (LTCL) can be set off against Long Term Capital Gains (LTCG) arising from the sale of assets such as gold or property. Here’s how the set-off of capital losses and gains works:
1. **Types of Capital Gains and Losses**:
- **Long Term Capital Gain (LTCG)**: Gains arising from the sale of assets held for more than 3 years (2 years in the case of certain assets like shares or mutual funds).
- **Long Term Capital Loss (LTCL)**: Losses incurred from the sale of assets held for more than 3 years (2 years in certain cases).
2. **Set-off Rules**:
- **LTCL can be set off against LTCG**: If you have LTCL from the sale of shares or equity-oriented mutual funds, you can set off this loss against LTCG arising from the sale of assets like gold or property.
- **Carry Forward of LTCL**: If the LTCL cannot be fully set off against LTCG in the same financial year, the remaining loss can be carried forward to future years. LTCL can be carried forward for up to 8 assessment years immediately following the assessment year in which the loss was first computed.
3. **Restrictions and Exceptions**:
- **Type of Asset**: Capital losses from the sale of specified assets (like shares, equity mutual funds) can generally be set off against LTCG from any other specified asset (like gold or property).
- **Same Category Requirement**: Losses from the sale of shares or mutual funds (which are considered "capital assets") can only be set off against gains from other capital assets like gold or property. They cannot be set off against gains from non-capital assets (like business income).
4. **Calculation and Reporting**:
- When filing your Income Tax Return, you need to categorize your gains and losses correctly (as LTCG and LTCL).
- Use Schedule CG of the Income Tax Return (ITR) to report capital gains and losses, and clearly indicate the set-off claimed.
In summary, yes, you can set off Long Term Capital Losses from the sale of shares or equity-oriented mutual funds against Long Term Capital Gains from the sale of assets like gold or property, subject to the specified rules and limitations under the Income Tax Act, 1961. Always ensure compliance with the latest tax laws and consult with a tax advisor for specific guidance tailored to your individual circumstances.
1. **Types of Capital Gains and Losses**:
- **Long Term Capital Gain (LTCG)**: Gains arising from the sale of assets held for more than 3 years (2 years in the case of certain assets like shares or mutual funds).
- **Long Term Capital Loss (LTCL)**: Losses incurred from the sale of assets held for more than 3 years (2 years in certain cases).
2. **Set-off Rules**:
- **LTCL can be set off against LTCG**: If you have LTCL from the sale of shares or equity-oriented mutual funds, you can set off this loss against LTCG arising from the sale of assets like gold or property.
- **Carry Forward of LTCL**: If the LTCL cannot be fully set off against LTCG in the same financial year, the remaining loss can be carried forward to future years. LTCL can be carried forward for up to 8 assessment years immediately following the assessment year in which the loss was first computed.
3. **Restrictions and Exceptions**:
- **Type of Asset**: Capital losses from the sale of specified assets (like shares, equity mutual funds) can generally be set off against LTCG from any other specified asset (like gold or property).
- **Same Category Requirement**: Losses from the sale of shares or mutual funds (which are considered "capital assets") can only be set off against gains from other capital assets like gold or property. They cannot be set off against gains from non-capital assets (like business income).
4. **Calculation and Reporting**:
- When filing your Income Tax Return, you need to categorize your gains and losses correctly (as LTCG and LTCL).
- Use Schedule CG of the Income Tax Return (ITR) to report capital gains and losses, and clearly indicate the set-off claimed.
In summary, yes, you can set off Long Term Capital Losses from the sale of shares or equity-oriented mutual funds against Long Term Capital Gains from the sale of assets like gold or property, subject to the specified rules and limitations under the Income Tax Act, 1961. Always ensure compliance with the latest tax laws and consult with a tax advisor for specific guidance tailored to your individual circumstances.
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