Loss from capital gain
This query is : Resolved
04 April 2018
A salaried person purchased some share in m/o April of F.Y 2017-18 & he sold this in the m/o Nov. 17. He found loss while selling the share Rs. 7000/-. so, please tell me that how can he adjust the loss and how many years & in which ITR form he will file. please tell me in detail.
Rajeev Kumar
Rajeev Kumar
04 April 2018
Voluntary filing of ITR for fin. yr. 2017-18 is barred by time, hence rest of the issues are left open.
04 April 2018
Loss from shares covered under LTCL & same is set off from LTCG only. So you will set off same if there is LTCG in your ITR.
You can c/f same for next 8 yrs if same ia not set off.
You can c/f same for next 8 yrs if same ia not set off.
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04 April 2018
If an investor held shares for less than 12 months from the date of buying then the loss is termed as Short Term Capital Loss(STCL).Which can be adjusted against Short Term Capital Gain or Long Term Capital Gain .If full amount not adjusted in the same FY it can be carried forward to subsequent 8 years.
03 August 2024
To address the treatment of capital losses and their implications for tax filing, here's a detailed guide:
### Treatment of Short-Term Capital Loss (STCL)
1. **Nature of Loss**:
- **Short-Term Capital Loss (STCL)**: Since the shares were held for less than 12 months, the loss is classified as a Short-Term Capital Loss (STCL).
2. **Adjustment of STCL**:
- **Against STCG**: STCL can be adjusted against Short-Term Capital Gains (STCG) earned in the same financial year.
- **Against LTCG**: If there are no STCG in the same financial year, the STCL can be adjusted against Long-Term Capital Gains (LTCG) if any.
3. **Carry Forward**:
- If the STCL is not fully utilized in the same financial year, it can be carried forward for up to 8 assessment years. The carried forward loss can be adjusted against any future STCG or LTCG.
### Filing Procedure
1. **ITR Form**:
- **ITR-2**: The salaried person should use **ITR-2** to report capital gains and losses. ITR-2 is suitable for individuals who have income from capital gains, and it accommodates reporting of both short-term and long-term capital gains or losses.
2. **Filing Steps**:
- **Declare STCL**: On the ITR-2 form, there will be a section for reporting capital gains. You should report the STCL under the section designated for short-term capital gains and losses.
- **Adjustment**: Mention the total STCL and adjust it against any STCG or LTCG in the same financial year as applicable.
- **Carry Forward**: If the STCL is not fully adjusted in the same year, ensure to mention the carried forward amount in the relevant section of the ITR form. This will be used to offset against future gains.
3. **Important Sections in ITR-2**:
- **Schedule CG**: This is the schedule where capital gains and losses are reported. Include details of STCL and any adjustments.
- **Schedule EI**: If carrying forward the loss, you need to declare the carried forward losses in this section.
### Example
Assuming the following scenario:
- **STCL**: ₹7,000 from the sale of shares.
- **STCG**: ₹5,000 in the same financial year (hypothetical amount).
**Adjustment**:
- **STCG**: ₹5,000 (fully adjusted against the STCL)
- **Unadjusted STCL**: ₹7,000 (STCL) - ₹5,000 (STCG) = ₹2,000
The remaining ₹2,000 of STCL will be carried forward to the next assessment year.
**Carrying Forward**:
- In the next financial year, you will need to report the carried forward STCL of ₹2,000 in the relevant section of the ITR form.
### Key Points
- **File on Time**: Ensure that the ITR is filed within the due date to avoid penalties and ensure that the loss can be carried forward.
- **Maintain Records**: Keep proper documentation of the transactions, including purchase and sale details, to substantiate the losses in case of any queries from the Income Tax Department.
- **Amendments**: If you realize a mistake or missed reporting in the original return, you can file a revised return before the end of the assessment year to correct it.
### Conclusion
To summarize:
- Report the STCL in ITR-2 under the capital gains section.
- Adjust the STCL against any STCG or LTCG in the same financial year.
- Carry forward any unadjusted STCL to future years, up to a maximum of 8 years.
- Ensure accurate reporting and timely filing to avoid issues and penalties.
### Treatment of Short-Term Capital Loss (STCL)
1. **Nature of Loss**:
- **Short-Term Capital Loss (STCL)**: Since the shares were held for less than 12 months, the loss is classified as a Short-Term Capital Loss (STCL).
2. **Adjustment of STCL**:
- **Against STCG**: STCL can be adjusted against Short-Term Capital Gains (STCG) earned in the same financial year.
- **Against LTCG**: If there are no STCG in the same financial year, the STCL can be adjusted against Long-Term Capital Gains (LTCG) if any.
3. **Carry Forward**:
- If the STCL is not fully utilized in the same financial year, it can be carried forward for up to 8 assessment years. The carried forward loss can be adjusted against any future STCG or LTCG.
### Filing Procedure
1. **ITR Form**:
- **ITR-2**: The salaried person should use **ITR-2** to report capital gains and losses. ITR-2 is suitable for individuals who have income from capital gains, and it accommodates reporting of both short-term and long-term capital gains or losses.
2. **Filing Steps**:
- **Declare STCL**: On the ITR-2 form, there will be a section for reporting capital gains. You should report the STCL under the section designated for short-term capital gains and losses.
- **Adjustment**: Mention the total STCL and adjust it against any STCG or LTCG in the same financial year as applicable.
- **Carry Forward**: If the STCL is not fully adjusted in the same year, ensure to mention the carried forward amount in the relevant section of the ITR form. This will be used to offset against future gains.
3. **Important Sections in ITR-2**:
- **Schedule CG**: This is the schedule where capital gains and losses are reported. Include details of STCL and any adjustments.
- **Schedule EI**: If carrying forward the loss, you need to declare the carried forward losses in this section.
### Example
Assuming the following scenario:
- **STCL**: ₹7,000 from the sale of shares.
- **STCG**: ₹5,000 in the same financial year (hypothetical amount).
**Adjustment**:
- **STCG**: ₹5,000 (fully adjusted against the STCL)
- **Unadjusted STCL**: ₹7,000 (STCL) - ₹5,000 (STCG) = ₹2,000
The remaining ₹2,000 of STCL will be carried forward to the next assessment year.
**Carrying Forward**:
- In the next financial year, you will need to report the carried forward STCL of ₹2,000 in the relevant section of the ITR form.
### Key Points
- **File on Time**: Ensure that the ITR is filed within the due date to avoid penalties and ensure that the loss can be carried forward.
- **Maintain Records**: Keep proper documentation of the transactions, including purchase and sale details, to substantiate the losses in case of any queries from the Income Tax Department.
- **Amendments**: If you realize a mistake or missed reporting in the original return, you can file a revised return before the end of the assessment year to correct it.
### Conclusion
To summarize:
- Report the STCL in ITR-2 under the capital gains section.
- Adjust the STCL against any STCG or LTCG in the same financial year.
- Carry forward any unadjusted STCL to future years, up to a maximum of 8 years.
- Ensure accurate reporting and timely filing to avoid issues and penalties.
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