suppose
I got __ 2.5 lakhs LTCG,
i have __ 8 lakhs LTCL
So can one first offset & exhaust LTCG exemptions u/s 112 of Rs. 1 lakh from 2.5 lakh LTCG?
and then adjust balance 1.5 lakh LTCG with carry forward LTCL of Rs. 8 lakhs in iTR ?
please provide procedure and where to do it while filing ITR?
got one online reference mentioned but not very lucid , if you can share some light on this.
Manner of Set off of loss:
We may have a scenario where there may be an STCL in a year and LTCG specified u/s 112A in the same year. Now the question is whether such exemption of Rs. 1 lakhs should first be applied and then set off the loss? or should losses first be set off and exemption of Rs.1 applied later? Let’s take a simple example, Mr.A holds an investment in equity-oriented Mutual Fund (Short term and covered u/s 111A) and he also holds an Equity share in Company X. During the FY Mr.A incurred a loss of Rs. 50,000 on sale of equity-oriented MF and had a gain on sale of equity share from the sale of a share in company X amounting to Rs. 90,000. Now, Mr.A is caught up in the middle of sec 112A and sec 70 whether to use the exemption u/s 112A first or to use set-off of loss u/s 70. …? If we look at the above scenario, it is prudent for Mr.A to apply the exemption provision u/s 112A first and arrive at the gain and the arrived balance gain be netted off against STCL by virtue of u/s 70. However, from Mr. A’s point of view, this may seem like the best option. He gets to claim the exemption and still have STCL carry forwarded for the next year. Though the Department has not come up with any explanation on the manner of set-off of loss u/s 70 and using of exemption provision u/s 112A, it would be wise to look at the situation based on the below-mentioned point. “It is a usual practice to first arrive at the gain or loss under one source and then move on to the other source under the same head. Sec 112A deals with LTCG or LTCL (one source) and sec 111A deals with STCG or STCL on sale of specified short-term asset (another source under the same head). In the given case it is natural to arrive at the final solution u/s 112A ( Rs. 90,000 less exemption to the extent of Rs. 1,00,000) first and then move on to sec 111A. Based on the above analogy, the final solution u/s 112A would be Nil and there would be no gains available under 112A to be netted off against loss under the head STCL.”
Conclusion: i) Based on the above analysis, exemption available u/s 112A should first be exhausted and then set off of loss under sec 112, sec 111A or any other STCL should be netted off to arrive at the final answer under the head Capital Gains. ii) However, it is up to the department to come up with an explanation on the above issue.
As there is no intimation by the ITD regarding the same as of now, we can assume it shall be valid for FY 2023-23/AY 2024-25 as it is valid for FY 2022-23/ AY 2023-24.
As per the rules, LTCL can only be set off against LTCG.
Also, you cannot choose to not set off and carry forward losses.
Hence, your net LTCL of ₹6.5 lakhs (8 lakhs - 2.5 lakhs) will be carried forward to the subsequent years. The exemption u/s 112A is not available in this case.
Hi,
I’ve LTCG from Equity Mutual Funds of Rs.5,17,000 with no salary and any other income. My income tax calculation is after reducing Rs.2,50,000 base exemption, remaining amount Rs.2,67,000 is considered for income at special rates, then after Rs.1,00,000 deduction, remaining amount Rs.1,67,000 is the final total income. Tax amount is Rs.16,700+Education cess. Is there any other way to reduce the total tax amount? Please provide your suggestion.
Thanks @Shrutika_Shah for the quick response. Unfortunately " Deductions under chapter VI A are not eligible for special rate incomes such as [short-term capital gains u/s 111A and long-term capital gains u/s 112A]".