Long term capital loss set off

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From AY 2003-2004, Long term capital loss can be set off only against Long term capital Gain. What is the logic behind this provision. Why only Long term capital Gain and why not Short term capital Gain.? Why was this change made by the ACT. Any idea ?

Replies (5)

Shruti,

 

Good Question.

 

Basically the logic is, the LT Gains are taxable at 10/20% whereas, ST gains from other than STT paid shares, is taxable at the normal slab rates.

 

now, say your slab is 30% and you set off the LCG chargeable at 20%, then you will be at a loss

or, if say you are in the 10% slab and you setoff this the LTCG (20%) against income chargable at 10%, the govt will be at a loss.

 

hence, the set off provisions, allow the set off to be against incomes falling in the same taxability slabs.

Hai Sruthi...congrats on your first post

Thank you Ankit sir :)

you are welcome...hope it was clear...

CAN LONG TERM CAPITAL LOSS BE ADJUST FROM SHORT TERM CAPITAL GAIN???


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