Basic queries on capital gain/loss

Lalit Kumar (Vice President ) (2213 Points)
Replied 09 November 2011

The STCL in this case first of all cannot be carried forward. The reason being the LTCG from Shares are exempt U/s 10(38) and therefore as per Sec 14, u cannot carry forward STCL.

Sakitram (NA) (189 Points)
Replied 10 November 2011

I could not understand what is u/s 14 and what is special in this case.

But I see it is valid that STCL is available for Set off and Carry forward as per the message I see in other threads.

Please help me to understand this a bit.

Thanks

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 11 November 2011

Loss c/f for the next eight years means loss can be c/f for 8 Asst years subsequent to the A.Y. in which you have incurred the loss.

For instance if you incur a loss in A.Y. 2011-12 relevant to P.Y.2010-11for say 100000 and after setting it off the loss of say 50000 is remaining. Then from A.Y. 2012-13 which is subsequent to A.Y. 2011-12 loss can be c/f upto A.Y.2020-21 to set-off against the STCL or LTCL(Other than exempt)

Hope the above would clariy your difficulty.

Suppose if you sell your house property after 36m from its purchase & you obtain an Capital Gain, then the STCL incurred can be set-off against LTCG and tha balance LTCG would be taxable.

For instance if you incur an LTCG of say Rs.1lacs & the STCL is incurred say of Rs. 70000 then LTCG would be taxable only to the extent of Rs. 30000(100000-70000)

1 Like

CA Bada Sanjay Kumar Reddy (CA) (69 Points)
Replied 19 November 2011

STCG ia taxable @ 15% if STT is paid. LTCG is exempt if STT paid. Sec 14A says Expenditure relating to Exempt Income is not allowed as deduction. It is Exempt Income what section says. Where as here STCG is a taxable Income. So, from the above it is clear that a STCL on which STT paid can be carried forward and can be adjusted against LTCG or STCG which is a taxable Income. But LTCL on which STT paid is not allowed to be carried forward considering the provisions of Section 14A of IT Act.

1 Like

Sakitram (NA) (189 Points)
Replied 19 November 2011

Originally posted by : Giridhar S Karandikar
	For instance if you incur an LTCG of say Rs.1lacs & the STCL is incurred say of70000 then LTCG would be taxable only to the extent of30000(100000-70000)

Here is my query that since LTCG is tax free why I need to adjust use old STCL with it for tax benifit.
Instead the old STCL can be adjusted with any current STCG. Am I right on this?

Thanks

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 19 November 2011

Please note that LTCG from sale of house property is not exempt u/s 10(38). Hence if there are gains arising under sale from house property the STCL can be adjusted against these.

only sale of shares on whihc STT is paid are exempt u/s 10(38).

Yes if you have STCG & LTCG then you can adjust the STCL against any of the incomes.

Sakitram (NA) (189 Points)
Replied 19 November 2011

Originally posted by : Giridhar S Karandikar
	only sale of shares on whihc STT is paid are exempt u/s 10(38). Yes if you have STCG & LTCG then you can adjust the STCL against any of the incomes.

My question is all about Equities (ie Shares) and also STT is paid always for all transaction as well.

Then in this case, the following points are valid

- I can carry forward STCL for next 8 AYs.
- If there is any STCG, I can adjust it with previous STCL (within 8 years)
- If there is any LTCG, there is no need to do adjustment with any STCL and no need to pay tax as well
- For both Equity Capital Gain/Loss (both short and long terms), I should use only ITR-2 form only

If I am wrong with any point, please let me know.

Thank you all.