What are the tax implications of LTCG and STCG? Explain the set off and carry forward of losses.

Question

Accepted Answer

LTCG and STCG have different tax implications. Losses can be set off and carried forward.

LTCG (Long Term Capital Gains) are taxed at a lower rate than STCG (Short Term Capital Gains).
STCG is added to the income and taxed as per the applicable tax slab.
Losses from both LTCG and STCG can be set off against gains from the same category.
If there are no gains in the same category, losses can be carried forward for up to 8 years.
For example, if you have a loss of Rs. 50,000 from STCG, you can set it off against STCG gains of Rs. 60,000. The remaining Rs. 10,000 can be carried forward for up to 8 years.
Similarly, if you have a loss of Rs. 1,00,000 from LTCG, you can set it off against LTCG gains of Rs. 1,20,000. The remaining Rs. 20,000 can be carried forward for up to 8 years.

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