I have LTCG for Rs 374750, STCL for Rs 801609. In the schedule CYLA carried forward loss is Rs 426860, without adjusting for exemption of Rs 125000 against LTCG. May please advise how can I claim it

Ans: Your LTCG is Rs.3,74,750.
Your STCL is Rs.8,01,609.
You have also mentioned carried-forward loss of Rs.4,26,860.
The important point is that the Rs.1.25 lakh LTCG exemption is applied before arriving at taxable LTCG.
It is not treated as an additional loss in the CYLA schedule.

» How The Rs.1.25 Lakh Exemption Works

For eligible equity-oriented mutual funds and listed equity, the annual LTCG exemption is Rs.1.25 lakh.
Your LTCG of Rs.3,74,750 is therefore first reduced by Rs.1.25 lakh.
The balance LTCG becomes taxable, subject to the applicable rules.
Your STCL can then be set off against eligible capital gains.
STCL can generally be set off against both STCG and LTCG.

» Why Your CYLA May Show Rs.4,26,860

The CYLA schedule deals with current-year losses.
The Rs.1.25 lakh LTCG exemption is not itself entered as a loss.
Therefore, you should not manually reduce the CYLA loss by Rs.1.25 lakh.
The tax utility should calculate the taxable capital gain after applying the exemption and set-off rules.
The carried-forward loss is considered in the later schedules after current-year set-offs.

» Important Point About Your Numbers

Your STCL of Rs.8,01,609 is larger than your LTCG of Rs.3,74,750.
Therefore, the current-year STCL can absorb the taxable LTCG, subject to the exact nature of the gains and losses.
The Rs.1.25 lakh exemption does not mean Rs.1.25 lakh is added to your carried-forward loss.
It simply reduces eligible taxable LTCG.

» What You Should Check In Your ITR

Check Schedule CG carefully.
Enter the LTCG under the correct equity category.
Enter the STCL under the correct short-term loss category.
Check Schedule CYLA for current-year loss adjustment.
Then check Schedule BFLA for brought-forward losses.
Finally check Schedule CFL for the amount being carried forward.
Do not manually change the loss figure only because of the Rs.1.25 lakh exemption.

» One Important Caution

The treatment depends on whether your LTCG and STCL are from equity shares or equity-oriented mutual funds.
It also depends on the relevant financial year.
If these figures relate to FY 2025-26, the Rs.1.25 lakh LTCG exemption is relevant.
Equity LTCG above Rs.1.25 lakh is taxed at 12.5%.
Equity STCL can be carried forward for future years, subject to timely filing of the return.

» What I Suggest

First check whether your ITR has correctly classified both gains.
Do not enter the Rs.1.25 lakh exemption as a separate loss.
Allow the capital-gain schedules to apply the exemption and set-off.
If the utility still shows an incorrect carry-forward amount, review Schedule CG, CYLA, BFLA and CFL together.
If the return has already been filed, the correction route depends on whether revision is still permitted.

» Final Insights

Your understanding is very close, but the Rs.1.25 lakh exemption works differently.
It reduces eligible LTCG.
It does not reduce the STCL or increase the carried-forward loss.
Your STCL may substantially offset your taxable LTCG.
The exact final carry-forward amount should come from the completed CG schedules.
Please do not alter the CYLA figure manually without checking the preceding schedules.

Best Regards,

K. Ramalingam, MBA, CFP,

AMFI-Registered MFD – ARN 4188

www.holisticinvestment.in/

https://www.linkedin.com/in/ramalingamcfp/