Long Term Capital Loss in ITR2

1. The option to select COA with indexation is only if there is any tax payable; not for claim of any loss. So, you cannot carry forward the said loss.
2. You tax liability (even though LTCG as 24 lakhs) would be Nill.... check Schedule SI.... there the indexation benefit is quite visible.

Thank you Dhirajlal ji for your quick reply.

Yes schedule SI is showing no tax.

Capital gain is showing in schedule TI, but not taxable. It may be for information purpose only.

I think I should proceed with filing.

Thanks.

Yes, your net tax liabiity is nill due to indexation benefit, while you cannot get any benefit of loss; hence you can proceed with fiing.

Thank you Sir, once again.

My Pleasure.         

Long term capital loss Rs 1,50,000 is carry forwarded from AY2024-25. In AY2026-27, Long term capital gain Rs 42,000 without indexation and Long term capital loss Rs 1,25,000 with indexation. I am not found option to choose Long term capital gain / loss with indexation in ITR2. 

In CFL schedule, earlier carry forwarded Long term capital loss has been reduced from Rs 1,50,000 to Rs 1,08,000. But Carry Forwarded Long term capital loss should be Rs 2,75,000 (Rs 1,50,000 + Rs 1,25,000)

How to correct in ITR2?

As reported earlier, the option of claiming COA/COI with indexation is available only if there is any gain, not if there is any loss. In another words the loss (where COA is indexed) reduces to zero. 

So, you cannot claim the loss or correct ITR; but accept the rule.

Thanks for your reply.

I understand that Current Long term capital loss with indexation on sale of property can't be carry forward for future. 

In my case, on sale of property, Current Long term capital loss with indexation of Rs 1,25,000 and Current Long term capital gain without indexation of Rs 42,000. It means that Long term capital loss with indexation will not forward for future and tax on Long term capital gain is ZERO.

In CFL schedule, earlier Carry Forwarded Loss (AY2024-25) of Rs 1,50,000 has been reduced to Rs 1,08,000 (Earlier Rs 1,50,000 - Current Long term capital gain without indexation Rs 42,000, even Current Long term capital loss with indexation of Rs 1,25,000). I think Rs 42,000 should not reduced from earlier carry forwarded loss.

Yes, that interpretation in a way be correct, but that had been applicable only if had there been any tax liability after utilization of total b/f LTCL. 

The default tax rate is 12.5%. The indexation benefit is only applicable if there is any tax liability. Here not only current year's gain is considered but even b/f losses are also considered for net tax liability.

So, you will have to bear it.

Lot of thanks for clarification.

You are welcome.              

The ₹24 lakh figure shown in the utility is the unindexed capital gain. To compute the correct tax, switch the calculation to the indexed cost method.

In ITR-2 → Schedule CG → Part B (Long-Term Capital Gains), for a property sold during FY 2025–26:

• If the property was acquired before 23 July 2024, you can choose either:

  • 12.5% tax without indexation, or

  • 20% tax with indexation.

• Since the property was purchased in FY 2009–10, the indexed cost works out to roughly ₹41.65 lakh, which is slightly higher than the sale consideration of ₹41 lakh. This results in a long-term capital loss of about ₹0.65 lakh.

In the utility, choose the "With Indexation" option for the asset, enter the acquisition year as FY 2009–10 and the original purchase cost as ₹17 lakh. The utility should automatically apply the Cost Inflation Index.

The resulting long-term capital loss will appear under Schedule CFL (Carry Forward of Losses). It can be carried forward for up to eight assessment years and set off against eligible long-term capital gains in future years. No tax is payable in the year of the loss.

There is no such option as toggling between the two options. The system calculates itself for both options and applies the lower tax of the two options. In case of loss, it is showing zero, no option to carry-forward.