17 March 2011
sale of equity held in a fund outside India sold (non stt). whether STCG arising from dat investment can be setoff agst c/fd STCL arising in India (stt paid transaction)??
18 July 2024
Yes, Short Term Capital Gains (STCG) arising from the sale of equity held in a fund outside India (where Securities Transaction Tax - STT - was not paid) can generally be set off against Short Term Capital Losses (STCL) carried forward from previous years in India. Here's how the set off works:
1. **Nature of Capital Gains and Losses:** - **STCG from Non-STT Paid Transaction:** This arises when you sell equity held outside India, where STT was not paid at the time of sale. - **STCL from STT Paid Transaction:** This is a loss incurred from the sale of securities in India where STT was paid.
2. **Set Off of STCG against STCL:** - As per the Income Tax Act, any STCG from non-STT paid transactions can be set off against any STCL (both STCG and STCG) from STT paid transactions. - This means if you have STCG from the sale of equity outside India without paying STT, you can set off this gain against any STCL you have from previous years in India where STT was paid.
3. **Calculation and Utilization:** - Calculate the total STCG arising from non-STT paid transactions. - Calculate the total STCL (STCG and STCG) available for set off from previous years. - You can set off the STCG from non-STT paid transactions against STCL from STT paid transactions, thereby reducing your taxable income. - Any remaining STCG after set off can be added to your total income for the current year and taxed accordingly.
4. **Reporting and Compliance:** - Ensure that you correctly report both the STCG and STCL in your income tax return. - Maintain proper documentation and records to support the set off claims in case of scrutiny by tax authorities.
It's recommended to consult with a tax advisor or chartered accountant who can provide specific guidance based on your individual circumstances and ensure compliance with tax laws.
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