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Loss carryforward and set off under new tax regime?

Tax queries 884 views 33 replies

I filed return online and I came back here to express special thanks to you. Without you it would be much more difficult to file return.

My Pleasure.                             

Capital loss carryforward and set-off is NOT affected by which income tax regime you choose.

The new tax regime vs old tax regime choice only affects deductions under Chapter VI-A (like 80C, 80D, HRA) and certain exemptions. It does NOT restrict the following:

- Short-term capital loss (STCL) can be set off against both STCG and LTCG
- Long-term capital loss (LTCL) can be set off against LTCG only (not STCG)
- Both STCL and LTCL can be carried forward for 8 assessment years
- The carry-forward rules apply whether you are on the old regime or new regime

One update from the Income Tax Act 2025 transition (applies from AY 2027-28 onwards): LTCL incurred up to March 31, 2026 will carry transitional relief for set-off in future years. For your current AY 2026-27 return, the Income Tax Act 1961 rules apply.

Practical tip: if you have carry-forward losses from prior years, make sure you filed the ITR in the year the loss was incurred to preserve the carry-forward. A missed or belated return can extinguish your carry-forward right.

This [AIS health-checker guide for pre-ITR verification](https://taxgarden.in/blog/ais-health-checker-pre-itr-verification-guide-india) has a section on verifying prior-year loss carry-forward balances in the AIS before filing, which helps catch any discrepancies early.

Capital loss carryforward and set-off is NOT affected by which income tax regime you choose.

The new tax regime vs old tax regime choice only affects deductions under Chapter VI-A (like 80C, 80D, HRA) and certain exemptions. It does NOT restrict the following:

- Short-term capital loss (STCL) can be set off against both STCG and LTCG
- Long-term capital loss (LTCL) can be set off against LTCG only (not STCG)
- Both STCL and LTCL can be carried forward for 8 assessment years
- The carry-forward rules apply whether you are on the old regime or new regime

One update from the Income Tax Act 2025 transition (applies from AY 2027-28 onwards): LTCL incurred up to March 31, 2026 will carry transitional relief for set-off in future years. For your current AY 2026-27 return, the Income Tax Act 1961 rules apply.

Practical tip: if you have carry-forward losses from prior years, make sure you filed the ITR in the year the loss was incurred to preserve the carry-forward. A missed or belated return can extinguish your carry-forward right.

This [AIS health-checker guide for pre-ITR verification](https://taxgarden.in/blog/ais-health-checker-pre-itr-verification-guide-india) has a section on verifying prior-year loss carry-forward balances in the AIS before filing, which helps catch any discrepancies early.


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