LTCG on Immovable Property

What is the asset sold/transferred? Whether any immovable property?

When was it sold? After 22July, 2024?

It is an Immovable Property sold after 22.07.2024

It is defect in the utility. You should be allowed for indexation, though the loss will not be allowed to be set off with any other LTCG.

File grievance as it is offsetting the bought foeward losses.

Set-off works as follows:

• Brought-forward long-term capital loss (Rs 270 lakh) can be set off only against long-term capital gains (Sec 74(1)(b)). Your LTCG of Rs 120 lakh on the property sale (after 22 July 2024) will be fully absorbed. The remaining Rs 150 lakh is carried forward (within its 8-year life, provided you file by the due date each year).

• Rate option: for land or building acquired before 23 July 2024 by a resident individual or HUF, the proviso to Sec 112(1)(a) lets you pay the lower of 12.5% without indexation or 20% with indexation. Here, with the b/f loss wiping out the gain, there's no tax either way. Choose the computation that preserves more loss to carry forward: the indexed computation gives a lower gain, so less b/f loss is consumed. The ITR utility may not let you choose the gain figure independently of the tax option. Check its behaviour.

• Sec 54/54EC exemptions are claimed before set-off. If you'd otherwise reinvest, the loss can be preserved for future gains.

• Report in Schedule CG and BFLA (set-off of b/f losses) and CFL (balance carried forward).

For AY 2025–26, the ₹120 lakh LTCG should first be computed under the applicable post-amendment rules; the option to use indexed cost for the tax comparison does not generally change the capital gain computed under the Act for set-off and carry-forward purposes. Accordingly, if the legally computed LTCG is ₹120 lakh, brought-forward capital loss can be set off against it, reducing the balance loss to ₹150 lakh. A nil tax on that gain does not, by itself, mean the set-off is reversed.

The surcharge issue needs a separate check. Surcharge is based on total income and the applicable rates, subject to the special cap on surcharge attributable to specified LTCG tax; it is not automatically eliminated merely because the tax attributable to LTCG is nil. The actual result depends on the taxpayer’s status, other income, the precise loss carried forward, and the return computation. If the software is using indexed cost to determine the set-off gain or taxing other income at a higher surcharge rate solely because of the LTCG, verify the Schedule CG, loss set-off and surcharge computation against the statutory computation rules.

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