CA CS
3064 Points
Joined June 2009
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.