Skip to content

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

Kavita Rao, a resident individual, has for tax year 2026-27 a short-term capital loss of Rs 90,000 on shares and a long-term capital gain of Rs 1,50,000 on listed shares (taxable) plus a short-term capital gain of Rs 30,000 on other assets. How may the short-term loss be set off, and what is the net short-term and long-term position?

The short-term loss is set off first against the Rs 30,000 short-term gain and the remaining Rs 60,000 against the long-term gain, leaving long-term gain of Rs 90,000. A short-term capital loss can be set off against any capital gain, short or long term.

  1. ASet off first against STCG Rs 30,000; remaining Rs 60,000 against LTCG, leaving LTCG Rs 90,000Correct
  2. BSet off only against STCG; Rs 60,000 carried forward
  3. CSet off only against LTCG; STCG remains Rs 30,000 and LTCG Rs 60,000
  4. DSet off against salary income to the extent of Rs 90,000

Explanation

A short-term capital loss may be set off against both short-term and long-term capital gains. Against STCG 30,000, leaving 60,000 loss, which is set off against LTCG 1,50,000 to leave 90,000. Restricting it to STCG is wrong, as long-term gains are also available.

Did you get it right without looking?

One question tells you little. A timed set on Set-Off or Carry Forward and Set-off of Losses shows your real accuracy, how long you take and where you lose marks.

Practise Set-Off or Carry Forward and Set-off of LossesFree diagnostic mock

More Set-Off or Carry Forward and Set-off of Losses questions