Sett off of f&o loss in short term gain

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Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2016 CAN F&O LOSS CAN BE ADJ WITH SHORT TERM GAIN IN DURING
YEAR OR SAME YEAR AS EXAMPLE:- F&O LOSS IN 50 LACS AND SHORT TERM GAIN IS 5 LAC'S WE HAVE TO PAY TAX IN 5 LAC OR IT CAN BE ADJ IN F&O LOSS

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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14 March 2016 Loss from the F&O business can be set off against STCG.

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2016 IF SHORT TERM CAPITAL GAIN ( STT PAID ) FROM SALE OF SHARES DURING YEAR

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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25 July 2025 Let's clarify your question about **set-off of F\&O loss against Short-Term Capital Gain (STCG)** with STT paid on shares.

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### Can F\&O loss be adjusted against Short-Term Capital Gain?

* **F\&O (Futures & Options) transactions** are treated as **business income (or loss)** under the Income Tax Act, **not as capital gains**.

* Losses from F\&O trading are considered **business losses**, and gains are business income.

* **Short-Term Capital Gains (STCG)** from sale of shares (where Securities Transaction Tax — STT — is paid) are taxed under the **capital gains head**, which is separate from business income.

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### Set-off rules:

* **Business losses (including F\&O losses) cannot be set off against capital gains (like STCG on shares).**
* So, **loss from F\&O cannot be adjusted against STCG**.

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### Example:

* F\&O Loss = ₹50 lakhs
* Short-term Capital Gain (STT paid) = ₹5 lakhs

**Tax implication:**

* You **cannot** adjust the ₹5 lakh STCG against the ₹50 lakh F\&O loss.
* You **pay tax on ₹5 lakh STCG** as it is.
* The F\&O loss of ₹50 lakhs can only be set off against **other business income** or carried forward for set off against future business income.

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### Summary:

| Income / Loss Type | Can F\&O Loss be Set Off? |
| ------------------------------ | ------------------------- |
| Short-Term Capital Gain (STCG) | **No** |
| Business Income | **Yes** |

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If you want, I can also help you draft this in a formal manner or provide references from tax provisions or rulings. Would you like that?

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