If I lost money in Peer to Peer lending (p2P) can those losses be written off ?
Quite good reference given which I was looking for. Thanks for your advise and solution
1 Like
Hey @nithesh_nahar,
The STCL will first be set off against the STCL from shares (111A) and then against the debt mutual funds. One cannot change the order of set-off.
Hope this helps!
@Surbhi_Pal @Shrutika_Shah is it necessary to set off long term capital losses from earlier year in subsequent years
Example - In âyear 1â if I had long term loss of 5lakh and in âyear 2â I had long term profit of only 2lakh, then: (my questions are related to LTCG on sale of shares or securities)
Q1- Is it necessary to set this gain of 2lakh from the loss of 5lakh or it can be deferred.
Q2- If it canât be deferred then while setting off the losses against gains how we will deduct the 1lakh exemption on profits made on LTCG, will it be first deducted and then losses will be settled off or vice versa
Q1: You donât have any choice. If youâre carrying forward losses the setoff is mandatory. So after the setoff youâll have 3 L losses to carry forward to future years (assuming theyâre not 8 years old).
Q2. You cannot make use of the 1 lakh exemption since you donât have any LTCG after the setoff.
Thank you Russell for your prompt response.
as in Q2 you said that 1lakh exemption cannot be made as I donât have any LTCG after setting off the losses, this implies that in any given year first the earlier year losses will be setoff and then the exemption will be taken (irrespective of the amount of loss or gain or amount setted off)?
Correct @Walker.
One year, I had substantial LTCL being carried forward. And then a small LTCG. All that happened is the LTCG reduced the LTCL and so a smaller LTCL got carried forward that year. The âš1L didnât enter the picture as there was no gain after the setoff. I learnt my lesson!
Over the weekend I just completed my tax return. This past FY I planned my trades so that I had LTCG equal to carry forward LTCL + âš99,xxx, which worked out perfectly to fully utilize the my old LTCL as well as talmost all of the âš1L and not pay any capital gains tax.
Hello Sir/ Maam,
I have some interest income & dividend income which is added to other incomes in Schedule P&L. It is set off there itself against my F&O losses. However in the CYLA schedule it is again adjusting my losses against other income. which is not right. how do i rectify this? If I manually remove the amount of other income on CYLA schedule, it gives an error of âMax losses not set offâ. please help
Hi, I have carry forward losses of options trading from last financial year fy 22-23 as Rs. 80,000/- and in this financial year I have LTCG as 3000 and STCG as 12000, Dividend income 1600, and bank interest income 4000 can I set off all these incomes from last financial years carry forward losses?
Hey @sann,
Your interest and dividend income will be reported under schedule other incomes and not schedule P&L. Once you remove the amount from schedule P&L, itâll only get set-off once.
Once business losses are carried forward, they can only be set-off against business profits in the subsequent years. Hence, your losses will be set-off if you have any F&O profits or any other business income.
Hi @Surbhi_Pal
If i have Carried Forward Losses from FnO of past years but now i stop doing FnO and henceforth do only intraday or delivery based short term cash market trading, can i show short term cash market trading as business income instead of STCG so as to be able to adjust past years FnO CFL against short term cash market trading profits. If yes, are there any special requirements required to be complied with to do so. Thanks!
Hi @Atul2,
Reporting settlements (trades) as CG or Business Income depends on the intent of the taxpayer. If the trade was undertaken with the intent of long term investment for capital appreciation and not earning short-term profit out of it then it has to be reported as CG and not Business Income and vice-versa.
But remember, the ITD recommends that you report the income in the same manner for the following years once you report CG as Business Income.
Thanks for the reply @Surbhi_Pal
While following all the guidelines mentioned in ur reply, for a full time trader is it allowed that one shows equity LTCG and at the same time show short term cash market trades as business income and not STCG?
Hi @Surbhi_Pal pls help in above query, thanks!
Hi @Atul2
LTCG arise when you hold the securities for more than 12 months with an intent to invest and not trade, thus LTCG has to be classified as Capital Gains and not business income.
On the other side, if you are a full time trader and have more number of trades in a financial year, and have an intent to earn profits and not hold for long time, you can report the gains from the same as Business Income.
Hope, this helps.
Thank you.
Can I set-off my Short Term Capital Loss in Equity Funds against short term capital gains in Debt Funds?
Hi @Sankar ,
Yes, you can can set off short-term capital loss against any short term capital gains regardless of their asset class. This is mentioned in section 74 of Income Tax Act, 1961.
1 Like
Thank you @Sakshi_Jain for the clarification
The discussion on âSet-off and Carry Forward of Lossesâ on QnA.Tax highlights the important provisions related to offsetting losses against taxable income and carrying them forward to future years. It explains the types of losses (business, capital, etc.) and the specific rules around set-off, such as the adjustment of losses from one head of income against another. For instance, business losses can be set off against any other income, while capital losses can typically only be offset against capital gains. The article also touches upon the carry-forward provisions for losses, which allow individuals to carry forward unutilized losses to future years, subject to certain conditions and time limits.