Skip to content

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

Rohan Mehta, a resident individual, has the following for tax year 2026-27: short-term capital loss of ₹70,000 on sale of listed shares (STT paid), long-term capital gain of ₹1,20,000 on sale of a plot of land, and short-term capital gain of ₹30,000 on sale of other listed shares (STT paid). Which statement about set-off of the short-term capital loss is correct?

The short-term capital loss can be set off against both short-term and long-term capital gains of the same year. Gains total ₹1,50,000, so after setting off the ₹70,000 loss the net capital gain is ₹80,000. It is long-term loss that is restricted to long-term gains.

  1. AIt can be set off only against short-term capital gain of ₹30,000, and the balance is carried forward
  2. BIt can be set off against both short-term and long-term capital gains, leaving net capital gain of ₹80,000Correct
  3. CIt can be set off only against long-term capital gain
  4. DIt cannot be set off in the same year and must be carried forward in full

Explanation

Short-term capital loss can be set off against both short-term and long-term capital gains of the same year. Total gains are ₹30,000 + ₹1,20,000 = ₹1,50,000. Less loss ₹70,000 gives net capital gain of ₹80,000. The first option wrongly restricts the set-off to short-term gains, which applies to long-term loss, not short-term loss.

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