Loss under the Head Capital Gains
Introduction
Losses under “Capital Gains” are classified as Short-term Capital Loss (STCL) and Long-term Capital Loss (LTCL). They must be distinctly computed and disclosed in income tax returns, with specific rules for set-off and carry forward.
Set-off and Carry Forward Rules
- Intra-head Adjustment:
o STCL: Can be set-off against any capital gain (short-term or long-term).
o LTCL: Can be set-off only against long-term capital gains.
- Inter-head Adjustment:
o Losses under “Capital Gains” cannot be set-off against income from other heads.
- Carry Forward:
o Unadjusted STCL or LTCL can be carried forward for up to 8 assessment years.
o LTCL can be adjusted only against LTCG; STCL can be adjusted against STCG or LTCG.
o Filing the return by the due date is mandatory for carry forward, subject to condonation for delay by the Assessing Officer or CBDT.
- Loss on Virtual Digital Assets (VDAs)
o Loss on transfer from VDAs cannot be set off against any income, including gains from other VDAs and vice-versa. Such losses are treated as “dead losses” and are not eligible for carry forward.