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CA Intermediate · Taxation · Set-Off or Carry Forward and Set-off of Losses

During tax year 2026-27, Kabir has a short-term capital gain of Rs 2,00,000 on shares sold, a short-term capital loss of Rs 70,000 on the sale of a plot of land, and a long-term capital loss of Rs 1,50,000 on unlisted shares. He has no long-term capital gains. What net capital gain is chargeable to tax for the year?

The chargeable net capital gain is Rs 1,30,000. The short-term capital loss of Rs 70,000 is set off against the Rs 2,00,000 short-term gain. The long-term capital loss cannot be set off against short-term gains, so it is carried forward to be set off only against future long-term capital gains.

  1. ANil
  2. BRs 50,000
  3. CRs 1,30,000Correct
  4. DRs 2,00,000

Explanation

A short-term capital loss can be set off against the short-term capital gain: 2,00,000 - 70,000 = Rs 1,30,000. A long-term capital loss can be set off only against long-term capital gains. Kabir has none, so the Rs 1,50,000 is carried forward for 8 tax years. Rs 50,000 wrongly sets the long-term loss against the short-term gain.

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