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I have Rs. 2.5 lakhs short-term capital loss carry-forward. How will it impact my tax this year?

Ramalingam

Ramalingam Kalirajan  |6886 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 14, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Shah Question by Shah on Oct 14, 2024Hindi
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Dear Sir, If i have 2.5 Lacs Short term capital loss carry forwarded of Previous year & Long term capital gain of 3 lacs from Selling Mutual Funds etc.. No Short term Capital Gain in Same Fin. Year What could be tax impact for this year.. I think Nil 1) First this will compensate against limit of 1.25 lacs as per latest Budget (3-1.25 = 1.75 lacs) & than it would be adjusted against last years Carry forwarded STCG of 2 lacs ? So it would be Nil as of Now.. and still I can get benefit of 25k next year... Pl revert if my Understanding is Correct..

Ans: Your understanding is mostly correct. The long-term capital gain (LTCG) of Rs 3 lakhs will first be reduced by the Rs 1.25 lakh exemption, leaving Rs 1.75 lakhs taxable. This Rs 1.75 lakhs can then be offset against your carried-forward short-term capital loss (STCL) of Rs 2.5 lakhs, making your taxable LTCG nil for the year. Additionally, you will carry forward Rs 75,000 of STCL to the next financial year, which can be used to offset future gains.

Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Hi, I'm Ritu from Patna. I've got two kids, 12 and 9, and we're covered under a family floater health insurance policy. But I'm wondering, should I also get a separate critical illness insurance policy for extra protection? Any pros and cons of it?
Ans: Hi Ritu! Having a separate critical illness policy could indeed provide an added layer of financial security. While a family floater health insurance plan typically covers hospitalization and medical expenses, a critical illness policy focuses specifically on major illnesses (like cancer, heart disease, or kidney failure), providing a lump-sum payout upon diagnosis. Here’s a look at the pros and cons:

Pros:

1. Lump-Sum Payout: Critical illness insurance provides a lump-sum amount on diagnosis, which can be used for treatment, lifestyle adjustments, or even household expenses if you or a family member cannot work due to the illness.
2. Income Replacement: If you or your spouse were unable to work due to a critical illness, this payout could cover lost income and help maintain your family’s lifestyle.
3. Flexible Usage: Unlike regular health insurance, the payout is not restricted to hospital bills. You can use it for any need, like home modification, recovery aids, or even travel for treatment.
4. Additional Coverage: It covers illnesses that often have high treatment costs that regular health insurance may not cover fully, especially if there are co-payments, sub-limits, or high deductibles.

Cons:

1. Limited Coverage: It only covers specified critical illnesses listed in the policy. If you’re diagnosed with a condition not on that list, you won’t receive a payout.
2. Waiting Periods and Survival Clauses: Many policies come with a waiting period (30 to 90 days), and you may need to survive for a certain period after diagnosis (usually 30 days) to claim the payout.
3. Premiums Increase with Age: Critical illness premiums can be higher as you age, so it’s usually more cost-effective if purchased early.
4. Can Overlap with Health Insurance: If your family floater policy has a large sum insured, it might cover most hospitalization costs even for serious illnesses, making a critical illness policy seem redundant in some cases.

Given that you have a young family and if your current health coverage isn’t very high, adding critical illness insurance could be a good idea. It’s worth discussing options with your insurer to tailor coverage to your family’s needs, ensuring a balance between adequate protection and affordability.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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