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

Nisha, a resident individual, has the following capital gains and losses for tax year 2026-27: short-term capital loss on sale of unlisted shares Rs 1,20,000; short-term capital gain on listed equity shares (taxable under the special rate) Rs 40,000; long-term capital gain on sale of land Rs 2,50,000. She has no brought-forward losses. What is her net capital gain after the permitted set-off?

A short-term capital loss can be set off against any capital gain, short-term or long-term. Nisha's gains total Rs 2,90,000 (40,000 plus 2,50,000). Setting off the Rs 1,20,000 loss leaves a net capital gain of Rs 1,70,000, with no loss left to carry forward.

  1. ARs 2,90,000
  2. BRs 1,70,000Correct
  3. CRs 1,30,000
  4. DRs 4,10,000

Explanation

A short-term capital loss may be set off against both short-term and long-term capital gains. Total gains are 40,000 + 2,50,000 = 2,90,000. Deducting the loss of 1,20,000 gives 1,70,000. Rs 1,30,000 wrongly sets off the loss only against the long-term gain and ignores the short-term gain; Rs 2,90,000 ignores the set-off; Rs 4,10,000 adds the loss instead of deducting it.

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