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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Concepts in Taxation

Mr. Rohit Nair, a resident individual aged 35, has the following income for the year: salary (taxable) Rs 12,00,000, interest on savings bank account Rs 8,000, and a long-term capital loss of Rs 50,000 on sale of listed shares. Under the set-off rules, the long-term capital loss can be:

A long-term capital loss can be set off only against long-term capital gains. It cannot reduce salary or interest income. If there are no such gains in the year, it is carried forward for up to eight assessment years to be set off against future long-term capital gains.

  1. ASet off only against long-term capital gainsCorrect
  2. BSet off against salary income
  3. CSet off against interest income
  4. DSet off against any income in the same year

Explanation

Long-term capital loss can be set off only against long-term capital gains, in the same year or carried forward for 8 years. It cannot be adjusted against salary or other income. Option 4 is wrong because only short-term capital loss has wider set-off, still limited to capital gains.

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