Confused about using Long Term Capital Loss from Grandfather Clause with Equity redemptions?

Ans: You can file a revised return only to remove the omission and mistake and/or correct the arithmetical error.It cannot be filed for altogether a new claim.

Thus, matter of new claim in revised return can be subject to litigation.

If you file revise return to claim brought forward loss of earlier years against capital gain of AY 2022-23 and if income tax department observes that it is new claim, your claim might be denied as same was not claimed in original return. However, it can be argued that revised return is filed to remove mistake of not claiming brought forward losses. 

Ans: Dear Sanjiv,

Based on the information available, it appears that you can indeed adjust your Long Term Capital (LTC) loss against LTC gains in the same financial year.

In your case, the LTC loss of Rs. 3.5 Lacs from the sale of a flat can be adjusted against the LTC gain of Rs. 4 Lacs from the redemption of equity shares and mutual funds. This leaves you with a balance LTC gain of Rs. 50,000.

As per the Income Tax Act, LTC gains up to Rs. 1 Lac are exempt from tax. Therefore, your balance LTC gain of Rs. 50,000 should be exempt.

Regarding the limit of LTC loss adjustment, there doesn't appear to be a specific limit of Rs. 2 Lacs for adjusting LTC loss against LTC gains. However, any unadjusted LTC loss can be carried forward to subsequent years and set off against future LTC gains.

Please note that this is a general interpretation based on the available information. For a more accurate understanding of your tax liability, I would recommend consulting with a tax professional or a chartered accountant who can provide advice based on a comprehensive understanding of your financial situation.

I hope this helps!

Ans: If immovable property (being land or building or both) held for not more than 24 months, it shall be treated as short-term capital asset. Equity or preference shares in a company which are listed in any recognized stock exchange in India shall be treated as short-term capital asset, if it is held not more than 12 months.

Further, Short-term capital loss can be adjusted against long-term capital gains as well as short-term capital gains.