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Long term shares

Bhavesh (Accounts) (899 Points)

27 October 2011

Sale of Long Term Equity Shares Sold in Loss, whether taxable or is a tax free. Plz. reply

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16 Replies

CA VISHAL RANA,CS,B.Com,AMFI (Chartered Accountant in Whole Time Practice) (4354 Points)
Replied 27 October 2011

LTCG on sale of Equity shares, which is sold on recognised stock exchange,..exempt u/s 10(38)....loss of these shares treated as dead loss.

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Devendra (Chartered Accountant) (4775 Points)
Replied 27 October 2011

If the shares are sold through a Recognized Stock Exchange, then you cannot carry forward this Loss as it shall be exempt u/s 10(38).

Regards,

Devendra K

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 27 October 2011

Originally posted by : Bhavesh C. Vyas
	Sale of Long Term Equity Shares Sold in Loss, whether taxable or is a tax free. Plz. reply

shares, which were in holding more than 365 days, sold through demat / recognized exchange and security transaction tax is paid, LTCG is tax free under sec 10(38, similer way LTCL can not be claimed on such loss.

Sunil Singh Thakur (AAO) (295 Points)
Replied 27 October 2011

sice gain on sale of long term equity shares is exempt u/s 10(38), the loss on such sale is not allowed to be set-off or to carry forward.

Nabeel (CA) (3288 Points)
Replied 28 October 2011

If the shares are sold through Recognised Stock exchange, then the loss can't be carry forward as per sec - 10(38)...........

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CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 28 October 2011

LTCG on sale of Equity shares, which is sold on recognised stock exchange,..exempt u/s 10(38)....loss of these shares treated as dead loss. can not carried forward...

Sharad Suman Das (art) (141 Points)
Replied 28 October 2011

in this case LTCG is exemted from tax u/s 10(38) and the loss cant be set off or carry forward

A.K.Banik (Tax Consultant) (1596 Points)
Replied 28 October 2011

Originally posted by : VISHAL RANA, AMFI,CA,CS FINAL,
	LTCG on sale of Equity shares, which is sold on recognised stock exchange,..exempt u/s 10(38)....loss of these shares treated as dead loss.

Is the term DEAD LOSS within the Provision of IT Act ? Please Clarify.

We all know that income from Exempt Souce can not be available for S/O and C/F . LTCG on Shares are Exempt u/s 10(38). So Such LTCG cant be available for S/O and C/F .

Hari Wadhwa (CA in Practice) (485 Points)
Replied 28 October 2011

Mr Akash

The term "Dead Loss" is NOT defined under the income tax act, 1961 rather it is used casually to indicate a type of loss which is of no relevance in the computation of income as it is NOT ALLOWED to SET OFF in the current year income or to CARRY FORWARD to set off in the future year's income.

Further, Mr Vyas,

Sale of Long term Equity Shares have two treatments under the income Tax Act: -

Case 1:- Held in DMAT form, sold through Stock exchange & STT was paid on sale

Treatment:- (a) In case of Gain: - EXEMPT

(b) In case of Loss: -No Set off or Carry Forward Allowed

Case 2: -Held in physical form, shares are of an Unlisted company (i.e, not sold through Recognised Stock exchange & hence no STT paid)

Treatment: - (a) In case of Gain: -Taxable @ with 2 scenarios

(b) In case of loss:- Loss is allowed to set off & carry forward.

3 Like

* Krishna * (CA Student) (6149 Points)
Replied 29 October 2011

@ Hari:

Can you please explain those two scenarios in case 2.

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A.K.Banik (Tax Consultant) (1596 Points)
Replied 29 October 2011

TO MR. WADHWA : thanks for this clarification.

A.K.Banik (Tax Consultant) (1596 Points)
Replied 29 October 2011

Originally posted by : Krishna
	@ Hari: Can you please explain those two scenarios in case 2.

I think this part is clearly deal in DT of CA Final. For IPCC , such indepth knowledge may not be necessary. However I always prefer to understand Advanced matters in taxation in lucid form (i.e understand beyond the sections).

CA Hardik Bunha (self) (2121 Points)
Replied 29 October 2011

Hey My Friends,

You all guys advice given above is WRONG

YOUR LOSS FROM LONG TERM SHARES WILL BE SET OFF OR CARRIED FORWARD..........

IF U GUYS BELIEVE THAT I M WRONG THEN TELL ME.....

BUT BEFORE TELLING ME YOU SHOULD REFER ALL SECTIONS OF SET OFF AND CARRIED FORWARD.

please students keep away from this, ONLY EXPERTS WELCOME....please......

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 29 October 2011

Originally posted by : hardik bunha
	Hey My Friends, You all guys advice given above is WRONG YOUR LOSS FROM LONG TERM SHARES WILL BE SET OFF OR CARRIED FORWARD.......... IF U GUYS BELIEVE THAT I M WRONG THEN TELL ME..... BUT BEFORE TELLING ME YOU SHOULD REFER ALL SECTIONS OF SET OFF AND CARRIED FORWARD. please students keep away from this, ONLY EXPERTS WELCOME....please......

My 1st request to read the query at a glance ........... ( the author disappeared without providing requisite inputs for the correct reply)

Originally posted by : Bhavesh C. Vyas
Sale of Long Term Equity Shares Sold in Loss, whether taxable or is a tax free. Plz. reply

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1) when its loss, then how the loss can be taxable ? matter can be about set off during the year or carry forward but not at all taxable in the year of loss.

2) in General long term capital gain from shares is classified under 10(38), coz in present days almost every share is traded through recognized stock exchange and STT is paid.

3) yes, with some homework done at the assessee end, such loss can be carried forward, but to be set off with .............? again with exempted capital gains of 10(38) in forthcoming years, which is already exempted ?

4) if the assessee has some other modes of LTCG other than 10(38), then he is free to adjust such loss from shares with the LTCG of other heads, but such set off is allowed from LTCG only, not with other types of incomes or gains.

to make such loss carried forward the assessee has to be enrich with certain informations, and "file the return WITHIN DUE DATES"

read the link carefully, if you want to keep your such LTCG alive for coming years ( unless you would have any LTCG other than 10(38), all exercise would go in vein)

https://www.taxmanagementindia.com/wnew/print_Article.asp?ID=439