Turn Short Term Capital Losses on Stocks into Tax Gains

View Comments

• I'm a bit confused about LTCG for mutual funds. Let me state my example and help me out with my query. I purchased equity mutual fund 4yrs ago for Rs. 50000. On 31st Jan 2018 the value was 85000. Today the value is 79000. My query is if I sell my mutual fund today do I make LTCG of (79000-50000=29000) or LTCL of (79000-85000=-6000)

  • Dear Nitya,
    Its Rs 29k.

    • I thought capital gains prior to 31st Jan 2018 was grandfathered? Please please explain how LTCG in above case is 29k.

      • Dear Nitya,
        In your original comment, you mentioned only about CG/CL and not on taxes.

        Kindly go through below points to understand about the calculation;

        If an equity share /equity mutual fund is purchased six months before 31st January, 2018 at Rs 1,000 and the highest price quoted on 31st January, 2018 in respect of this share is Rs 1,200, there will be no tax on the gain of Rs 200, if this share is sold after one year from the date of purchase.

        However, any gains in excess of Rs 200 earned after 31st Jan 2018 will be taxed at 10%, if this share is sold after 31st March 2018. Kindly note that you pay tax only the extra gain made after 31st Jan, 2018 and only if all such extra gains are above Rs 1 lakh.

        So, If your LTCG is say Rs 1.25 Lakh and tax of 10% is applicable then you need to pay tax on Rs 25,000 only i.e., Rs 2,500 (up to Rs 1 Lakh, it is tax-free and on the remaining Rs 25,000 gains, 10% tax is applicable).

        Kindly read :
        * 10% LTCG Tax on sale of Stocks/Equity Mutual Funds | Budget 2018-19 Proposal
        * Budget 2018 LTCG Tax on Equity Mutual Funds & Important Implications

• Hi,
  In future if I sell some of my mutual funds and my LTCG in equity mutual funds exceeds Rs. 1 lakh, can I set off the LTCG against my Short term capital loss in a debt fund..

  • Dear Nelu,
    Its the other-way round, you can set off STCL on Debt funds with LTCG on equity funds.

• Dear Sir,I have withdrawn epf after resignated from job,,,while receiving amount pf dept has deducted the 10% amount ,how to recover the amount,,,,i am currently under 20% slab range......please guide

  • Dear santosh,
    If you have withdrawn your EPF balance within 5 years of service, such amount is taxable as per your tax slab rate.
    So, you have to pay balance 10% more tax on the amount.
    Read:
    TDS & misconceptions.
    EPF withdrawals & new TDS rules.

• Hi..
  Say I have 100 shares of Rs 10 each with current price of Rs 8 which resulted into short term capital loss of Rs 200. If i am selling shares to realizes loss and buy it on same day with same price of Rs 8 then:

  will it be considered as short term capital loss or Intraday transaction resulting into nil profit/loss ?

  • Dear Mazhar ..These two are two different transactions. The second one, are you referring to SHORT SELL? If yes, then it is intra-day trading.

• ITR 2 How to fill short term losses and gain of equity shares of previous years?
  Short term: In year 2010–11 : Loss of Rs. 5000, 2011–12: loss of 3000, 2013–14 gain of 2000, in 2014–15 gain of 8000, in 2015–16 Nil. How are these mentioned in ITR 2 for financial year 2014–15 and in financial year 2015–16? in CFL schedule. Do we have to mention losses after reducing profits?

  All the returns were filled on Time, In CFL schedule there is no provision to fill the gain. So during submitting Returns for FY 2014–15, How the individual have to fill the losses in CFL schedule for year 2010 to 2012 and what to fill in 2013–14 column? If again someone fill the 5000 in 2010–11; 3000 in 2011–12 and leave 2013–14 empty then it will setoff wrongly and no tax make but correctly tax had to be made on 2000 gain of 2014–15. There may be two ways— during 2014–15 return, in CFL schedule one may write

  1. in 2010–11 : 3000 ; in 2011–12 : 3000; in 2012–13 : Nil ; in 2013–14: Nil and this will setoff 6000 from 8000 gain of 2014–15; another way is
  2. in 2010–11 : Nil ; in 2011–12 : Nil; in 2012–13 : Nil ; in 2013–14: 6000 that which is carry forward loss shown in ITR2 of Year 2013–14 and this will also setoff 6000 from 8000 gain of 2014–15;

  Please let me know which way is the correct one while filling ITR. and In 2015–16 as previous losses are already setoff so all Years in CFL has Nil.

  • Dear Kapil ..A Chartered Accountant would be the best person to answer your query. Kindly consult a CA.

• Hi Sreekanth,

  I have an income from salary and used to file ITR-1. I suffered losses of around 1 lakh in equity shares trading (intraday) and also in derivatives trading for AY 2016-17. Could you help me which ITR form should I fill and where to mention the loss. Can this loss be set off in next Assessment year if I am in profit?

  Thanks for the advise.

  • After going through other posts/blog i feel need to file ITR-4. But after login to e-filing site it gives only 2 options. ITR1 & ITR4S. There is no ITR-4 option. Please let me which form and where to mention the loss.

    thanks

    • Dear Mayank..You need to download the excel utility, fill the details and upload the xml.
      You may take help of a CA.

      • Dear Sreekanth,

        In FY 2014-15 I had loss about 5 lakhs from indtraday share trading. I consulted a CA and he put this under Short Term Capital Loss in ITR4 form to be carry forward. However now I came to know that this must be under speculative loss. Was my ITR filling incorrect ?

        if yes, what can I do now for last year incorrect ITR ?
        Does speculative loss require book keeping and auditing?

        Thanks for your help, Sir.

        Regards
        Amit

        • Dear Amit,
          Income from intraday trading in shares is treated as speculative business income. The loss cannot be set off against salary income, if any.
          Speculative losses or loss from intraday trading can be carry forwarded for the next 4 years provided you have declared the same while filing your returns within due date. Important to note with speculative losses is that it can be set off only against any other speculative profit you make within the next 4 years and not against any other profits (Section 73(1) of the Income Tax Act, 1961).
          You may have to Rectify your return. Kindly contact a trusted CA.

• Hello,

  In FY 2015-16, I have STCL of Rs 35000 on equity. I also have LTCG of Rs 45000 on equity.
  Can I carry forward this loss of Rs 35000 to the next year? I understand set-off against LTCG on equity is pointless as that is tax exempted anyway? Is that correct?

  Regards,
  Sachin

  • Dear Sachin,
    Yes, you can C/F the losses.
    Kindly note that Short Term capital losses can be carried forward only if you file Income-Tax returns on time.

• Dear Shreekanth,

  I have a doubt on set off STCL.

  Whether STCL can be adjusted on STCG & LTCG made from Direct equities and equity Mutual fund.

  What are the sources i can set off my SLCL.

  • Dear Jananai..STCL on which investment??

• Dear Sir.
  In FA 2015-16, I am having the Short Term Capital loss from Shares of Rs 10000/- and Short term Capital Gain from Debt Mutual Fund of Rs 4700/-. Can I set off this Short Term Capital loss from Shares with Short term Capital Gain from Debt Mutual Fund and Cary forward the Short Term Capital loss for next year.

  • Dear Dharmendra,
    1 - Yes
    2 - You can carry forward the Short Term Capital Losses to subsequent 8 fiscal years.

    • Thanks for answering my query.

• Nice Article