1. While it's true that CG are taxed based on "asset classes", gains and losses are set off in Income Tax rules under "income heads".
2. Therefore, Income Tax rules don't allow losses under "Capital Gains" head to be set off against any income from other "income heads", and this can be only set off within "Capital Gains" head.
3. For instance, any losses in business income and rental income can't be set off within "capital gains" head as they have their own "heads" in income tax rules.
4. Within "Capital Gains" head, LTCL can be set off only against LTCG, and STCL can be set off against both LTCG and STCG, for "capital transactions" of any asset class.
5. The same logic applies for carry forward of losses too, if you are not able to set off your entire capital loss in the same year.
6. Both STCL and LTCL can be carried forward, but only separately, for 8 Assessment Years immediately following the Assessment Year in which the loss was first computed.
7. LTCG from sale of property, gold or debt funds can be set off against STCL on stocks or equity funds to bring down tax liability, all being under "CG" income head.
8. LTCL can be set off against LTCG but not against STCG.
9. STCL can be set off against both STCG as well as taxable LTCG.
10. In case of work-related capital assets, you can claim depreciation on them.
11. STCG tax can be reduced by booking loss on stocks trading lower than your purchase price before financial year end, and adjusting its STCL against other LTCG or STCG of the financial year.
12. Both STCL and LTCL can be separately carried forward to a maximum of 8 assessment years immediately succeeding the assessment year for which the loss was first computed.
13. Carried-forward STCL can be set off against any future income under the head Capital Gains (short-term or long-term).
14. However, carried-forward LTCL can be set off against future LTCG only.
15. Similarly, losses from real estate sale can also be carried forward and adjusted.
16. Income tax returns need to be filed before the due date to remain eligible for carrying forward losses, and availing their usefulness in future.
17. You can’t adjust LTCL if you sell shares through a broker.
18. But if you sell stocks to your parents through an off-market transaction, where no STT is paid, you can adjust LTCL against other capital gains.
19. Gifting money to your child above 18 is without any tax liability, and then investing it in his name is a perfectly legal strategy, with no taxes on capital gains if the total income is less than the child's basic exemption.
2. Therefore, Income Tax rules don't allow losses under "Capital Gains" head to be set off against any income from other "income heads", and this can be only set off within "Capital Gains" head.
3. For instance, any losses in business income and rental income can't be set off within "capital gains" head as they have their own "heads" in income tax rules.
4. Within "Capital Gains" head, LTCL can be set off only against LTCG, and STCL can be set off against both LTCG and STCG, for "capital transactions" of any asset class.
5. The same logic applies for carry forward of losses too, if you are not able to set off your entire capital loss in the same year.
6. Both STCL and LTCL can be carried forward, but only separately, for 8 Assessment Years immediately following the Assessment Year in which the loss was first computed.
7. LTCG from sale of property, gold or debt funds can be set off against STCL on stocks or equity funds to bring down tax liability, all being under "CG" income head.
8. LTCL can be set off against LTCG but not against STCG.
9. STCL can be set off against both STCG as well as taxable LTCG.
10. In case of work-related capital assets, you can claim depreciation on them.
11. STCG tax can be reduced by booking loss on stocks trading lower than your purchase price before financial year end, and adjusting its STCL against other LTCG or STCG of the financial year.
12. Both STCL and LTCL can be separately carried forward to a maximum of 8 assessment years immediately succeeding the assessment year for which the loss was first computed.
13. Carried-forward STCL can be set off against any future income under the head Capital Gains (short-term or long-term).
14. However, carried-forward LTCL can be set off against future LTCG only.
15. Similarly, losses from real estate sale can also be carried forward and adjusted.
16. Income tax returns need to be filed before the due date to remain eligible for carrying forward losses, and availing their usefulness in future.
17. You can’t adjust LTCL if you sell shares through a broker.
18. But if you sell stocks to your parents through an off-market transaction, where no STT is paid, you can adjust LTCL against other capital gains.
19. Gifting money to your child above 18 is without any tax liability, and then investing it in his name is a perfectly legal strategy, with no taxes on capital gains if the total income is less than the child's basic exemption.