Exempted Income

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CA Ysil Karunai (Querist)
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24 October 2009 Dear Sir,
When long term capital gain on sale of shares (covered by STT) is fully exempt from tax u/s 10(38).
Query:
1. What about when incur a loss?
2. Whether the loss is carry forward?
3. u/s 14A any expenditure incurred towards exempted income it shall not be allowed as deduction, in such a case what about when loss incurred on exempted income as mentioned in above question?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 October 2009 1.Loss is also exempted.
2.Cannot be carried forward.
3.Expenditure against exempted loss will be disallowed.

Sreedhar Atchutuni ACA,GradCWA

Sreedhar Atchutuni ACA,GradCWA (Expert)
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24 October 2009 Where an income is exempt from tax which means income includes loss also.Such loss is not allowed to setoff and carry forward.

So, LTCL is exempt from tax. It is not allowed to setoff against another LTCG and also carry froward.

Section 14A remains the same both incase of exempted income and exempted loss.

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