By Chirag Nangia
With a grandfathered price if there is lengthy term capital loss can we carry forward the loss to adjust against future gains or we have to just overlook the loss for ever? Earlier we have been displaying the loss and adjusting them with future gains.
—UM Ramachandran
With impact from April 1, 2018, lengthy term capital gains in excess of Rs 1 lakh on sale of equity shares, units of equity-oriented mutual funds have been made taxable at 10%. However, in order to shield the investor interests, gains up to January 31, 2018 have been grandfathered. Grandfathering provisions that apply to shares acquired ahead of January 31, 2018, do not impact a taxpayer’s entitlement to set-off/ carry forward lengthy-term capital losses.
Accordingly, the lengthy term capital losses from transfers executed on or immediately after April 1, 2018 can be set-off against any other lengthy term capital obtain and balance, if any, can be carried forward to subsequent eight years. Notably, lengthy term capital gains on sale of equity shares/ equity oriented mutual funds have been exempt up to March 31, 2018. Therefore, losses from transfers effected ahead of the reduce-off date would be treated as dead loss and shall not be permitted to be set-off.
I earned significantly less than Rs 20,000 in FY20-21. In March 2020, I opened a demat account and began investing and trading. I made losses in each day trading and quick term investing. How ought to I file my ITR?
—Ajay Sharma
One desires to file ITR only when gross total revenue in a monetary year exceeds the simple exemption limit. However, the Income Tax Act makes it possible for set-off and carry forward of losses only if the return of revenue/loss of the year in which loss is incurred is furnished on or ahead of the due date of furnishing the return. So, even although your total revenue is beneath the simple exemption limit, in order to carry forward your losses and cut down your tax liability for subsequent assessment years, you will have to file a return. Since you have revenue from enterprise and profession, you may possibly declare revenue in ITR 3. Income from share trading and practicing law may possibly be declared as enterprise revenue and capital gains from investing in shares may possibly be declared beneath ‘schedule CG’ of the ITR kind.
The writer is director, Nangia Andersen India. Send your queries to