I have long term capital loss on property but long term capital gain from investments in stocks. Can LTCG on equity offset against LTCL on property?

Ans: In India, the Income Tax Act has specific provisions for the treatment of capital gains and losses. Here’s how it generally works:

1. Same Category Set-Off: Long-term capital losses (LTCL) can only be set off against long-term capital gains (LTCG). Similarly, short-term capital losses (STCL) can only be set off against short-term capital gains (STCG) or LTCG.

2. Carry Forward of Losses: If the capital loss cannot be fully set off in the same financial year, it can be carried forward for up to eight assessment years immediately succeeding the assessment year in which the loss was first computed. However, the carried-forward losses can only be set off against long-term capital gains in subsequent years.

Specific Case: LTCL on Property and LTCG on Stocks

• Long-term capital loss (LTCL) from property: This is a loss incurred on the sale of a property held for more than 24 months.
• Long-term capital gain (LTCG) from equity investments: This refers to gains from the sale of equity shares or equity mutual funds held for more than 12 months, which are subject to specific tax rates.

According to Indian tax laws:

• Set-Off: Yes, you can set off your long-term capital losses from the sale of property against your long-term capital gains from the sale of equity investments (stocks).

Example Scenario:

• LTCL from Property: Rs 10,00,000
• LTCG from Equity Investments: Rs 8,00,000

Here’s how you can handle it:

• Offset the Rs 8,00,000 LTCG from equity investments with Rs 8,00,000 of the Rs 10,00,000 LTCL from property.
• You will have Rs 2,00,000 of LTCL remaining, which you can carry forward for up to eight assessment years.

Filing and Reporting:

• Schedule CG: You need to report these transactions in Schedule CG of your Income Tax Return (ITR).
• Carry Forward Loss: Ensure you file your tax return before the due date to be eligible to carry forward the loss.

Key Points

• Tax Rates: LTCG on equity shares and equity mutual funds exceeding Rs 1 lakh is taxed at 10% without the benefit of indexation.
• Documentation: Keep all transaction records, such as purchase price, sale price, dates, and related costs.

It is advisable to consult a tax professional or financial advisor to ensure compliance with current tax laws and to optimise your tax planning strategy.