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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Capital Gains

Which statement about set-off of capital losses is correct for a resident individual?

A long-term capital loss can be set off only against long-term capital gains. It cannot reduce short-term gains or income from other heads such as salary. Unabsorbed long-term losses can be carried forward for eight assessment years, but only against future long-term gains.

  1. AA long-term capital loss can be set off against both short-term and long-term capital gains
  2. BA long-term capital loss can be set off only against long-term capital gainsCorrect
  3. CA short-term capital loss can be set off only against short-term capital gains
  4. DCapital losses can be set off against salary income of the same year

Explanation

A long-term capital loss can be set off only against long-term capital gains, and unabsorbed amounts can be carried forward for 8 assessment years. A short-term capital loss can be set off against both short-term and long-term gains. Capital losses cannot be set off against other heads such as salary.

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