Long Term Capital Loss - cannot be carried forward?

Hi

I have time till July 31st 2026 to file my ITR2. Is the notional loss due to indexation not allowed to be carried forward after the change in Income Tax rules for CG in 2024?

That's correct. The loss would not be allowed if indexation option is used to calculate the LTCG.

The utility is behaving correctly — you can't carry that indexed "loss" forward, and switching to the old regime won't change it. Here's why.

For land or building acquired before 23 July 2024 and sold on or after that date, the Finance Act 2024 removed indexation and taxes long-term capital gains at 12.5% without indexation. Resident individuals and HUFs get a relief: the tax is the lower of (a) 12.5% without indexation, or (b) 20% with indexation. But that indexation is allowed only to compute and cap the tax — it cannot be used to create a capital loss.

In your case, your sale price is actually higher than your original 2010 cost, so in real terms this is a gain (about ₹10 lakh), not a loss. The ₹50 lakh "loss" appears only because indexation has inflated your cost — and the law does not let that indexed figure become a carry-forwardable loss. What the relief does is bring your tax down: since the 20%-with-indexation route works out to nil, your tax on the sale is nil (the "no tax liability" you're seeing). But nil tax is not the same as a loss you can carry forward.

So there's no loss to carry forward, because economically you made a gain. This has nothing to do with old versus new regime — capital gains on property are taxed under the special rates either way, and the indexation-only-for-tax rule applies under both. A real, carry-forwardable long-term capital loss would arise only if your actual sale price were below your actual cost.

Under the new tax regime, capital losses from property sales CANNOT be carried forward. The ITR utility is behaving correctly.

Here is how the two regimes compare on this:

New regime: Loss from capital assets cannot be set off against gains or carried forward at all. Rs 50L LTCL is simply lost ,  no future benefit.

Old regime: LTCL can be set off against any LTCG in the same year. The balance (after set-off) can be carried forward for 8 assessment years and set off against future LTCG.

With Rs 50L in losses, switching to the old regime is worth calculating carefully.

Deadline: If you have business/professional income, you need to file Form 10-IEA on the income tax portal (e-File > Income Tax Forms) before July 31, 2026 to switch to the old regime for AY 2026-27. Salaried individuals with no business income simply select old regime while filing the ITR.

One thing to check: under the old regime, if your total income is below the taxable threshold after all deductions, the benefit of carrying forward the LTCL may still be worth having for years when you earn capital gains.

For end-to-end ITR-2 filing with property sale capital gains and loss carryforward handled correctly, Tax Garden's [GST return filing guide for proprietors](https://taxgarden.in/blog/gst-return-filing-proprietorship-india-step-by-step-2026) also covers direct tax compliance for business owners with property transactions.

Thanks everyone for the clarifications.

Regards

Sri

I am facing the same problem