Now that LTCG on equity and equity funds are also being taxed, can you tell me how the loss set offs will work in this case?
Answer
Answer
Below table have the details on capital loss set-off rules on sale of Stocks, Equity Mutual Fund Schemes, and listed Debentures & Bonds;
Stocks and Equity Funds (holding more than 65% of AUM in equities
How the Capital Loss / Capital Gain Set off works
Short term capital losses (STCL)
Can be set off against the short term gains of any capital asset or long term gains from any capital asset
Short term capital gains (STCG)
Can be used to set off short term losses on other capital assets, but not long term equity losses of other capital assets or equity funds
Long term capital losses (LTCL)
Can be set off against the long term capital gains from any capital asset
Long term capital gains (LTCG)
Taxable at 10% and can be only used to set off long term capital losses on equity (LTCL)
For example : If you had made a short term capital loss on Stocks and have a Long term capital gain on Sale of House property in a Financial Year, you can set-off losses on Stock investment against gains on Property. The only condition here is that they both should be arising from a capital asset as per the definition under the Income Tax Act.