Articles
Set Off and Carry Forward of Losses – Capital Gains and House Property
This article talks about the complicated matter of set off and carry forward of losses. It explains what set off and carry forward means, and talks about the treatment of the most commonly encountered losses - Capital loss and loss from house property.
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We all know we have to pay income tax on any income that we earn or profit that we make.
But what about losses? If we pay the government when we make a profit, shouldn't the government pay us when we make a loss? That would be wonderful, wouldn't it? |
Well, something like that can happen only in a fantasy world.
But the income tax laws provide for something very similar – you can set off your losses against your profits, and can even carry them forward to subsequent years.
Don't understand what this means? Here's a detailed explanation.
What is Set Off of Losses?
When you have a loss under one of the heads of income (like income from house property), and for the same year, you also have a profit (or income) under the same or some other head of income, you can reduce your profit / income by the amount of the loss.
This means that your total income also gets reduced by that much, and you end up paying that much lesser income tax!
For example, if you have a loss of Rs. 1 Lakh from the head “income from property”, and you set it off against your “income from salary”, your income for that year gets reduced by Rs. 1 Lakh. Now, if you are in the 30% tax bracket, you would end up saving Rs. 30,000!
(And since money saved is money earned, in effect, its equivalent to getting something back from the department of income tax!)
What is Carry Forward of Losses?
If your income / profit is less than your loss, you would not be able to set off the full loss. In such a case, you can carry forward the loss to the next year, so that you can set it off against your income / profit in the subsequent year(s).
Now, the rules around carry forward and set off of losses are relatively complex – not all types of losses can be set off against income from another heads, and there are rules restricting carry forward of losses as well.
Let's try to understand some most commonly encountered rules - about capital loss and loss from house property - in detail.
Basic Rules Regarding Set Off and Carry Forward of Losses
1. A very important rule to remember is that losses that are carried forward have to be set off against income from the same head in the subsequent years – they can not be set off against income from any other head of income.
For example, if you have a loss from house property, you can set it off against income from house property or income from salary in the year of the loss. But if you carry it forward, in the next year, you can set it off only against income from house property.
2. A carried forward loss can be set off against income in subsequent years only if the loss has been declared in the income tax return filed by you.
Additionally, if you have:
- A loss under the head capital gains, or
- Speculation business loss, or
- A loss under the head income from business or profession, or
- Loss from the activity of owning and maintaining race horses,
You have to file a loss return (or a return of loss) as per section 139 (3) if you want to carry forward the loss to subsequent years.
3. A loss for a particular year can be carried forward only if the income tax return for that year is filed by the due date. The only exception to this rule is loss from house property – this loss can be carried forward even if the IT return is not filed in time.
General Steps in Set Off and Carry Forward of Losses
There are three stages or steps involved:
Step 1: Inter source adjustment under the same head of income.
If you have a loss under a particular head of income, you are allowed to set it off against an income from the same head.
For example, a short term capital loss from selling one set of shares can be set off against a short term capital gain from selling another set of shares.
For example, a loss from house property can be set off against your income from salary.
Set Off and Carry Forward of Capital Losses
Long term capital loss can be set off only against a long term capital gain.
Short term capital loss can be set off against any capital gain – long term or short term.
Both long term and short term capital losses can not be set off against income from any other head of income.
Any capital loss remaining after set off can be carried forward for upto 8 years.
A capital loss for a particular year can be carried forward only if the income tax return for that year is filed by the due date.
Set Off and Carry Forward of Losses from House Property
A loss from house property can be set off against income from any other head in the same year.
Any remaining loss can be carried forward for upto 8 years. In these subsequent years, this loss can be set off only against income from house property.
A loss for a particular year can be carried forward even if the income tax return for that year is not filed by the due date.
Please also read:
- "Long Term and Short Term Capital Gain - Income Tax Calculation"
- "Long Term Capital Gains (LTCG) on Sale of a House – Calculation and Income Tax"
- "How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House"
Other articles you might be interested in:
- How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House
- Long Term Capital Gains (LTCG) on Sale of a House – Calculation and Income Tax
- Long Term and Short Term Capital Gain - Income Tax Calculation
- How to fill Income Tax Return Form 1 (ITR1) - Instructions and Video Tutorial
- The stock market is falling – Time to invest?
- Residential / Commercial Property for a Non Resident Indian (NRI)
- An introduction to Hedge Funds
- Banks increase interest rates for deposits and lending (loans)
- Matthews India Fund MINDX: A good proxy to invest in India
- Why does the financial / fiscal year start from 1st April?
- Tata AIG - Maharaksha Accident and Injury Policy
- Provident Fund (PF) and Voluntary Provident Fund (VPF)
Related links from the web (Sponsored):
Articles by Category:
- Gold
- Income Tax - IT
- India for NRIs and Non Indians
- Insurance
- Investment Philosophy and Planning
- Loans
- Mutual Funds - MF
- News and Developments
- Others and Miscellaneous
- Real Estate
- Stocks - Shares - Equities
Note: Please treat the opinion expressed here as a broad suggestion. Please consult your financial planner / investment advisor before making any investment decision.
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Re: Intrest - EMI & PreEMI crossing 1.5 lacs
The upper limit of claiming the interest (incuding pre-EMI interest) u/s 24 is Rs. 1,50,000.
Thus, the maximum that you can claim in any given year is Rs. 1.5 Lakhs.
This amount claimed u/s 24 would be a negative amount, as it is an expense. It should be set off against any income that you have from another house property.
Any remaining loss should be set off against income from salary, etc.
If, after this, any loss still remains, you can carry forward it to the subsequent years.
So, to answer your questions:
If interest component of EMI + pre-EMI interest is more than Rs. 1.5 Lakhs in a year, the amount over and above Rs. 1.5 Lakhs can not be claimed u/s 24.
(So, speaking from a tax savings point of view, this amount goes "waste"!)
Therefore, it can not be carried forward to the next year.
Only the amount (within the limit of Rs. 1,50,000) that can not be set-off against income from any of the heads can be carried forward to next year.
This also means that you do not need to revise the income tax returns for the last year.
Thus, the maximum that you can claim in any given year is Rs. 1.5 Lakhs.
This amount claimed u/s 24 would be a negative amount, as it is an expense. It should be set off against any income that you have from another house property.
Any remaining loss should be set off against income from salary, etc.
If, after this, any loss still remains, you can carry forward it to the subsequent years.
So, to answer your questions:
If interest component of EMI + pre-EMI interest is more than Rs. 1.5 Lakhs in a year, the amount over and above Rs. 1.5 Lakhs can not be claimed u/s 24.
(So, speaking from a tax savings point of view, this amount goes "waste"!)
Therefore, it can not be carried forward to the next year.
Only the amount (within the limit of Rs. 1,50,000) that can not be set-off against income from any of the heads can be carried forward to next year.
This also means that you do not need to revise the income tax returns for the last year.
Author:
venkat
Mar 14, 2009
Mar 14, 2009
setting off long term capital loss arising out of sale of shares
hello sir- i have the following questions wrt long term capital loss arising out of sale of shares -
1. can i reset long term capital loss arising out of sale of shares in the same year against long term gains from shares, real estate etc...
2. can i carry forward long term capital loss arising from the sale of shares?
3. if yes, then against what can i offset these losses
1. can i reset long term capital loss arising out of sale of shares in the same year against long term gains from shares, real estate etc...
2. can i carry forward long term capital loss arising from the sale of shares?
3. if yes, then against what can i offset these losses
Re: setting off long term capital loss arising out of sale of shares
Hi Venkat,
Long term capital gain from sale of shares is not taxed at all. Therefore, the loang term capital loss from shares can also not be set off against any other gain.
Keeping this in mind, following are the answers to your questions:
1. No
2. No
3. Not applicable
Long term capital gain from sale of shares is not taxed at all. Therefore, the loang term capital loss from shares can also not be set off against any other gain.
Keeping this in mind, following are the answers to your questions:
1. No
2. No
3. Not applicable
Author:
Narayan Reddy
Jun 04, 2009
Jun 04, 2009
Short term Capital losses
Hello sir,
I have short term losses from shares of around 5 lakhs this financial year(April 2008- March 2009) and my income from salary is 6.5 lakhs.
1). Can I set off the short term losses from shares with
my salary income.
2).Suppose if not possible,with what income can i set off this short term loss.
3)As of now I have no plans to invest in shares till 5 years.And I am planning to invest after 5 years.So can i set off this year losses with the short term gains if at all gained after 5 years.
4).For carry forward losses and set off short term losses,what are the forms to be submitted while filing tax returns.
I have short term losses from shares of around 5 lakhs this financial year(April 2008- March 2009) and my income from salary is 6.5 lakhs.
1). Can I set off the short term losses from shares with
my salary income.
2).Suppose if not possible,with what income can i set off this short term loss.
3)As of now I have no plans to invest in shares till 5 years.And I am planning to invest after 5 years.So can i set off this year losses with the short term gains if at all gained after 5 years.
4).For carry forward losses and set off short term losses,what are the forms to be submitted while filing tax returns.
Re: Short term Capital losses
Hello Narayan,
1. No.
2. Capital loss - short term or long term
3. Yes. You can carry forward your loss for upto 7 years.
4. No forms need to be filled. In the capital gains section in the ITR, mention your loss, and carry it forward to the next year. There are relevant fields in the ITR.
1. No.
2. Capital loss - short term or long term
3. Yes. You can carry forward your loss for upto 7 years.
4. No forms need to be filled. In the capital gains section in the ITR, mention your loss, and carry it forward to the next year. There are relevant fields in the ITR.
Author:
Sundar S
Jun 14, 2009
Jun 14, 2009
Doubts on Filling up the Forms say ITR 2
Dear Sir,
Your site is perhaps THE ONLY RAY of sunshine in this area -I say this after regularly buying the NABHI Ready Reckoners etc NOT a single actual sample form is available anywhere -too much to expect the geniuses at the IT Dept to include a sample filled up Form !
For the benefit of all of us (I am positive many will agree),I beh you to throw some light on the stuff below :-
More on How to fill up Form ITR 2 (or any):-
Schedule CG-OS :-
Does one mention Long Term Cap gains (on purchase/sale of shares subjected to STT) in Schedule CG-OS ? After all the income is tax free -so does one include it in the Return (apart from in Schedule EI (Exempt income) ?
Also how does one fill up Section D in this schedule (the online version allows no negative numbers) I refer to the date wise breakup of Long and Short Term Gains :- ie :- Upto 15/9 16/9 to 15/12 16/12 to 15/3 16/3 to 31/3 How does one fill up the above say if one has a loss upto 15/9 (say Minus -30000), a net gain of 60000/ by 15/12 ie * a actual gain of 90000 -which wipes out the loss of 30000 in earlier quarter etc etc ). Say by 31/3 one ends up with a NET LOSS -how does one actually ENTER these realities in a form THAT WILL NOT ALLOW NEGATIVE NUMBERS ?
Schedule EI :- Clarity on where to include interest earned on PPF (whether in (1)Interest income which may also include interest from Tax Free Bonds etc or in (5) Others,(including exempt income of minor child)
Schedule AIR :- Require a proper explanation (with examples) of all the codes mentioned for eg :- Code 005 = "Payment made by you of an amount of one lakh rupees or more for acquiring shares issued by a company" -DOES THE ABOVE include shares bought on the BSE /NSE exchanges ? etc What happens when bonds worth say AMOUNT X (> 20 Lakhs)are redeemed and creditted automatically into your designated bank account ? How to account for a sudden increase in your say Savings Account ? Under what code does one mention this in the above Schedule ?
Again the Schedules CYLA-BFLA and CFL with some concrete examples will be of real practical use !
In conclusion,I must thank you in advance (yet to see any such site in the Finance and Taxation Field -only the techies are really "OPEN" and share knowledge)
My apologies for a looonnggg message and Best Regards
Your site is perhaps THE ONLY RAY of sunshine in this area -I say this after regularly buying the NABHI Ready Reckoners etc NOT a single actual sample form is available anywhere -too much to expect the geniuses at the IT Dept to include a sample filled up Form !
For the benefit of all of us (I am positive many will agree),I beh you to throw some light on the stuff below :-
More on How to fill up Form ITR 2 (or any):-
Schedule CG-OS :-
Does one mention Long Term Cap gains (on purchase/sale of shares subjected to STT) in Schedule CG-OS ? After all the income is tax free -so does one include it in the Return (apart from in Schedule EI (Exempt income) ?
Also how does one fill up Section D in this schedule (the online version allows no negative numbers) I refer to the date wise breakup of Long and Short Term Gains :- ie :- Upto 15/9 16/9 to 15/12 16/12 to 15/3 16/3 to 31/3 How does one fill up the above say if one has a loss upto 15/9 (say Minus -30000), a net gain of 60000/ by 15/12 ie * a actual gain of 90000 -which wipes out the loss of 30000 in earlier quarter etc etc ). Say by 31/3 one ends up with a NET LOSS -how does one actually ENTER these realities in a form THAT WILL NOT ALLOW NEGATIVE NUMBERS ?
Schedule EI :- Clarity on where to include interest earned on PPF (whether in (1)Interest income which may also include interest from Tax Free Bonds etc or in (5) Others,(including exempt income of minor child)
Schedule AIR :- Require a proper explanation (with examples) of all the codes mentioned for eg :- Code 005 = "Payment made by you of an amount of one lakh rupees or more for acquiring shares issued by a company" -DOES THE ABOVE include shares bought on the BSE /NSE exchanges ? etc What happens when bonds worth say AMOUNT X (> 20 Lakhs)are redeemed and creditted automatically into your designated bank account ? How to account for a sudden increase in your say Savings Account ? Under what code does one mention this in the above Schedule ?
Again the Schedules CYLA-BFLA and CFL with some concrete examples will be of real practical use !
In conclusion,I must thank you in advance (yet to see any such site in the Finance and Taxation Field -only the techies are really "OPEN" and share knowledge)
My apologies for a looonnggg message and Best Regards
Author:
Sundar S
Jun 14, 2009
Jun 14, 2009
"Unique Transaction Number"
How does one go about obtaining this ? Most banks don't even bother stamping their TAN and PAN properly!
Re: Doubts on Filling up the Forms say ITR 2
Hi Sundar,
I am sorry for the late reply – I was busy with the redesign of the site, and you had a lot of questions. So, it took time :-)
Thanks a lot for all the praise… I really appreciate it. Over the years, I have acquired some knowledge about stuff related to personal finance. This is my effort to help and give back…
I use open-source software for this website. I agree that techies are really open in sharing their projects, sharing their knowledge and in helping others! Maybe I learnt this from them ;-)
Ok, coming to your queries.
LTCG on sale of shares subjected to STT: This needs to be mentioned in Schedule EI only.
Section D in schedule CG: I don’t have much experience with the online filing of returns. So, I’m sorry, I wouldn’t be able to help you out here.
Schedule EI - Interest earned on PPF: Please include this in (1) Interest income
Schedule AIR – AIR codes:
Code 005 – Yes, it includes shares bought in the secondary market as well, and not just in an IPO.
Bonds worth > 20 Lakhs are redeemed and credited automatically into bank account - Under what code does one mention this in the above Schedule: This should be under code 001, as this is a “cash deposit aggregating Rs. 10 Lakhs or more”.
Schedules CYLA-BFLA and CFL:
These are the schedules related to set off of losses. This is a 3 stage process, and each schedule covers one step.
The first step (Schedule CYLA) is to set off current year losses with current year income. Here, your current year income is reduced by your current year losses wherever allowed.
The second step (Schedule BFLA) is to set off carried forward losses (losses from previous years) with current year income. Again, your current year income is reduced by your carried forward losses wherever allowed.
The last step (Schedule CFL) is to arrive at losses that would need to be carried forward to subsequent years. Whatever losses (either from the current year or the losses carried forward from previous years) that can not be set off against income of the current year can be carried forward.
Since this can have many permutations and combinations, it would not be possible for me to have an illustration. But I hope the above explanation helps you understand these better.
Unique Transaction Number (UTN):
I understand your concern! Although it has good logic behind it, a UTN is quite impractical considering the current systems in place.
But don’t worry. Quoting of UTN is NOT MANDATORY for returns filed for FY 2008-09 (AY 2009-10). The Central Board of Direct Taxes (CBDT) has clarified this via notification No. 31 of 2009 dated 25 March 2009.
So, you can file your returns without any worry!
I am sorry for the late reply – I was busy with the redesign of the site, and you had a lot of questions. So, it took time :-)
Thanks a lot for all the praise… I really appreciate it. Over the years, I have acquired some knowledge about stuff related to personal finance. This is my effort to help and give back…
I use open-source software for this website. I agree that techies are really open in sharing their projects, sharing their knowledge and in helping others! Maybe I learnt this from them ;-)
Ok, coming to your queries.
LTCG on sale of shares subjected to STT: This needs to be mentioned in Schedule EI only.
Section D in schedule CG: I don’t have much experience with the online filing of returns. So, I’m sorry, I wouldn’t be able to help you out here.
Schedule EI - Interest earned on PPF: Please include this in (1) Interest income
Schedule AIR – AIR codes:
Code 005 – Yes, it includes shares bought in the secondary market as well, and not just in an IPO.
Bonds worth > 20 Lakhs are redeemed and credited automatically into bank account - Under what code does one mention this in the above Schedule: This should be under code 001, as this is a “cash deposit aggregating Rs. 10 Lakhs or more”.
Schedules CYLA-BFLA and CFL:
These are the schedules related to set off of losses. This is a 3 stage process, and each schedule covers one step.
The first step (Schedule CYLA) is to set off current year losses with current year income. Here, your current year income is reduced by your current year losses wherever allowed.
The second step (Schedule BFLA) is to set off carried forward losses (losses from previous years) with current year income. Again, your current year income is reduced by your carried forward losses wherever allowed.
The last step (Schedule CFL) is to arrive at losses that would need to be carried forward to subsequent years. Whatever losses (either from the current year or the losses carried forward from previous years) that can not be set off against income of the current year can be carried forward.
Since this can have many permutations and combinations, it would not be possible for me to have an illustration. But I hope the above explanation helps you understand these better.
Unique Transaction Number (UTN):
I understand your concern! Although it has good logic behind it, a UTN is quite impractical considering the current systems in place.
But don’t worry. Quoting of UTN is NOT MANDATORY for returns filed for FY 2008-09 (AY 2009-10). The Central Board of Direct Taxes (CBDT) has clarified this via notification No. 31 of 2009 dated 25 March 2009.
So, you can file your returns without any worry!
Author:
Sundar S
Jul 02, 2009
Jul 02, 2009
A few more queries (just a few)
Dear Sir,
I thank you for answering my questions.I am emboldened
to trouble you again for the foll:-
In the place where the long term and Short term taxes are to be
given quarterly basis ie 15/9 ,15/12,15/03 etc :-
1) does one include LTCG and STCG subjected to STT
(ie shares related) ?
2) Does one put negative numbers (say if one fills manually) ?
3) Take the scenario I mentioned ie
15/9 -a loss of 30000 (-30000)
18/12 -a net gain of 60000 (ie actual gain of 90000)
..31/03 - a NET LOSS occurs.
How EXACTLY does one enter these details ?(I can tell u the
online form wants nothing to do with negative numbers -I am
thinking manual now)
Re: Schedule AIR :- For code 005 -does one add up the
total value of all shares purchased from BSE/NSE
in the Financial Year and put the TOTAL ?
For Code 001 -suppose a Tax Free Bond got matured and
automatically credited to your Savings Acct -does one
put this under Code 001 ?
I MUST THANK YOU in ADVANCE for your PATIENCE and will
certainly let my friends know re: ur site.I am yet to go
thru other areas of ur site but will do so soon...(as soon as
I get this TAX thing off my head).regards and thanks.
I thank you for answering my questions.I am emboldened
to trouble you again for the foll:-
In the place where the long term and Short term taxes are to be
given quarterly basis ie 15/9 ,15/12,15/03 etc :-
1) does one include LTCG and STCG subjected to STT
(ie shares related) ?
2) Does one put negative numbers (say if one fills manually) ?
3) Take the scenario I mentioned ie
15/9 -a loss of 30000 (-30000)
18/12 -a net gain of 60000 (ie actual gain of 90000)
..31/03 - a NET LOSS occurs.
How EXACTLY does one enter these details ?(I can tell u the
online form wants nothing to do with negative numbers -I am
thinking manual now)
Re: Schedule AIR :- For code 005 -does one add up the
total value of all shares purchased from BSE/NSE
in the Financial Year and put the TOTAL ?
For Code 001 -suppose a Tax Free Bond got matured and
automatically credited to your Savings Acct -does one
put this under Code 001 ?
I MUST THANK YOU in ADVANCE for your PATIENCE and will
certainly let my friends know re: ur site.I am yet to go
thru other areas of ur site but will do so soon...(as soon as
I get this TAX thing off my head).regards and thanks.
Author:
Sunil Khandelwal
Jul 02, 2009
Jul 02, 2009
Set off of Capital gains
Re: A few more queries (just a few)
Hi Sundar,
Not a problem - I am glad I am able to help.
Capital Gain: The date wise CG needs to include all capital gains. Yes, you shoud put negative numbers as well. But please remember to put the gross amounts for each period. (So, it would be -30000 and 90000 in your case)
AIR Code 005: Yes, please put the total amount.
AIR Code 001: This is for cash deposits only. So, you do not need to worry about this situation! (Sorry, I missed that earlier)
Not a problem - I am glad I am able to help.
Capital Gain: The date wise CG needs to include all capital gains. Yes, you shoud put negative numbers as well. But please remember to put the gross amounts for each period. (So, it would be -30000 and 90000 in your case)
AIR Code 005: Yes, please put the total amount.
AIR Code 001: This is for cash deposits only. So, you do not need to worry about this situation! (Sorry, I missed that earlier)
Re: Set off of Capital gains
Hi Sunil,
Looks like there is a mistake in your question - there is no question of setting of a gain against another gain.
Can you please rephrase your question?
Looks like there is a mistake in your question - there is no question of setting of a gain against another gain.
Can you please rephrase your question?
Author:
Sunil
Jul 03, 2009
Jul 03, 2009
Set off of Capital gains
Re: Set off of Capital gains
Hi Sunil,
Long term capital losses can not be set off against any other gain. (Since long term capital gain is not taxed, long term capital loss can't be set off against anything).
Long term capital losses can not be set off against any other gain. (Since long term capital gain is not taxed, long term capital loss can't be set off against anything).
Author:
Anand
Jul 08, 2009
Jul 08, 2009
Re: Set off of Capital gains
Re: Re: Set off of Capital gains
Hi Anand,
Good question - it would help many people understand this better.
The tax provisions say that if a gain from something is not taxed, a loss from that can not be used to set off another gain.
So, since gain from equities / equity MFs is not taxed, loss from them can't be used to set off any other gain.
So, to answer your question, long term capital loss (shares / Eq. MFs) can not be set off against the capital gains from Debt MFs.
LT capital loss from debt MFs can be set off against LT capital gain from debt MFs.
Good question - it would help many people understand this better.
The tax provisions say that if a gain from something is not taxed, a loss from that can not be used to set off another gain.
So, since gain from equities / equity MFs is not taxed, loss from them can't be used to set off any other gain.
So, to answer your question, long term capital loss (shares / Eq. MFs) can not be set off against the capital gains from Debt MFs.
LT capital loss from debt MFs can be set off against LT capital gain from debt MFs.
Author:
Anand
Jul 09, 2009
Jul 09, 2009
Schedule CG in ITR2
Thanks for the clarification.
1. I do have ST loss from Shares.
Can I use this loss to offset against LT gains from
"Debt" MF ?.
(as both ST gains from Shares and LT gains from Debt MFs
are taxable, I think I can do this).
Please confirm.
2. Should I mention my LT capital loss from Shares
in ITR2 ?. Can I carry forward those losses for next year ?.
(it may help if Govmt chooses to tax LT gains from
shares sometime in next 7-8 years).
If yes, where I should mention it ?
In Schedule CG, under LT Capital gains
there are two cases - Sec 112 exercised / Sec 112 not exercised.
Which one is applicable for LT loss from shares ?.
Thanks,
Anand
1. I do have ST loss from Shares.
Can I use this loss to offset against LT gains from
"Debt" MF ?.
(as both ST gains from Shares and LT gains from Debt MFs
are taxable, I think I can do this).
Please confirm.
2. Should I mention my LT capital loss from Shares
in ITR2 ?. Can I carry forward those losses for next year ?.
(it may help if Govmt chooses to tax LT gains from
shares sometime in next 7-8 years).
If yes, where I should mention it ?
In Schedule CG, under LT Capital gains
there are two cases - Sec 112 exercised / Sec 112 not exercised.
Which one is applicable for LT loss from shares ?.
Thanks,
Anand
Author:
Suresh
Jul 09, 2009
Jul 09, 2009
Filing Loss Return
Hi Raag,
You have mentioned that we have to file a loss return if we need to carry forward the losses. Whether there is any separate form that we have to submit inorder to file a loss return?
Appreciate your help.
Thanks
Regards
Suresh R
You have mentioned that we have to file a loss return if we need to carry forward the losses. Whether there is any separate form that we have to submit inorder to file a loss return?
Appreciate your help.
Thanks
Regards
Suresh R
Author:
Suresh
Jul 09, 2009
Jul 09, 2009
Short term Capital Loss
Hi Raag,
I have a loss of Rs.30000 by selling shares. Where do we need to mention this loss in the CG schedule of ITR2 form. Do we need to mention any additional information along with this loss amount ?
Thanks,
Regards
Suresh
I have a loss of Rs.30000 by selling shares. Where do we need to mention this loss in the CG schedule of ITR2 form. Do we need to mention any additional information along with this loss amount ?
Thanks,
Regards
Suresh
Author:
Sunil
Jul 09, 2009
Jul 09, 2009
Set off of Capital gains
Hi
You have said "Long term capital losses can not be set off against any other gain. (Since long term capital gain is not taxed, long term capital loss can't be set off against anything). "
Then I belive it's prudent to sell it few days before 12 months (to make them short term losses) and then one will be able to adjust against long term gain in debt funds.
What's wrong in it (yes one would have to bear STT and may be exit loss in MF) but still if losses are significant it makes sense.
Regards,
Sunil
You have said "Long term capital losses can not be set off against any other gain. (Since long term capital gain is not taxed, long term capital loss can't be set off against anything). "
Then I belive it's prudent to sell it few days before 12 months (to make them short term losses) and then one will be able to adjust against long term gain in debt funds.
What's wrong in it (yes one would have to bear STT and may be exit loss in MF) but still if losses are significant it makes sense.
Regards,
Sunil
Author:
Anish
Jul 15, 2009
Jul 15, 2009
interest under section 234 B
I have following income from other sources:
a) Bank interest - 4000 Rs
b) STCG (equity sale, STT paid) - 7500 Rs
The TDS on salary is more than 90% of the total tax liability (including tax on income from other sources). I have not paid any advance tax in 2008-09 FY. Do I need to pay interest under section 234 B?
a) Bank interest - 4000 Rs
b) STCG (equity sale, STT paid) - 7500 Rs
The TDS on salary is more than 90% of the total tax liability (including tax on income from other sources). I have not paid any advance tax in 2008-09 FY. Do I need to pay interest under section 234 B?
Re: Schedule CG in ITR2
Hi Anand,
1. Yes.
2. You can not carry forward LT capital loss from shares.
Sec 112 (1) is applicable when income other than LT capital gains is less than the minimum taxable income.
1. Yes.
2. You can not carry forward LT capital loss from shares.
Sec 112 (1) is applicable when income other than LT capital gains is less than the minimum taxable income.
Re: Filing Loss Return
Hi Suresh,
There is no separate loss return - it needs to me mentioned in ITR2 only.
Please mention it in schedules CG (A)(2), CYLA and CFL.
There is no separate loss return - it needs to me mentioned in ITR2 only.
Please mention it in schedules CG (A)(2), CYLA and CFL.
Re: Set off of Capital gains
Hi Sunil,
I agree, this is a viable from taxation point of view.
I believe you would buy the same shares back, right? This might mean that when you sell them, you might have to pay short term capital gains tax (on a sale that would otherwise have been a long term capital gain).
I personally do not recommend selling long term investments for any non-investment concerns.
I agree, this is a viable from taxation point of view.
I believe you would buy the same shares back, right? This might mean that when you sell them, you might have to pay short term capital gains tax (on a sale that would otherwise have been a long term capital gain).
I personally do not recommend selling long term investments for any non-investment concerns.
Re: interest under section 234 B
Hi Anish,
You would not need to pay interest u/s 234B.
You would not need to pay interest u/s 234B.
Author:
Dhana Prakash
Jul 20, 2009
Jul 20, 2009
Single Return or multiple return for Spouse Salary
Hi Raagav,
Can you please clarify whether we have to a file seperate return or combined return for my Spouse salary. She is working as a teacher with Rs.66,000 annual income.
If we can file seperate return, under which conditions, we have to combine the income and enter at Schedule SPI?
Can you please clarify? May be another article from you on this subject would benefit many like me.
Regards,
Dhana Prakash
Can you please clarify whether we have to a file seperate return or combined return for my Spouse salary. She is working as a teacher with Rs.66,000 annual income.
If we can file seperate return, under which conditions, we have to combine the income and enter at Schedule SPI?
Can you please clarify? May be another article from you on this subject would benefit many like me.
Regards,
Dhana Prakash
Re: Single Return or multiple return for Spouse Salary
Hi Dhana,
Since your wife is working and earning her own income, it would not be clubbed with your income. Her income would be taxed separately.
Only if you gift an amount to her, the income generated from such an amount would be clubbed with your income.
Since her income (Rs. 66,000) is below the taxable threshold, there would be no tax on it and therefore, she doesn't need to file an income tax return.
This is a good idea for an article - I would try to write about it soon. Thanks for the suggestion!
Since your wife is working and earning her own income, it would not be clubbed with your income. Her income would be taxed separately.
Only if you gift an amount to her, the income generated from such an amount would be clubbed with your income.
Since her income (Rs. 66,000) is below the taxable threshold, there would be no tax on it and therefore, she doesn't need to file an income tax return.
This is a good idea for an article - I would try to write about it soon. Thanks for the suggestion!
Author:
Niraj Agrawal
Jul 22, 2009
Jul 22, 2009
Short Term Capital Loss from Shares & Income from commission
Hello Raag,
I have short term losses from shares in last four years of around 5 lakhs.
Year 2006 - 2 lakhs (Approx)
Year 2007- 1 Lakhs(Approx)
Year 2008- 1 Lakhs(Approx)
Year 2009- 1 Lakhs(Approx)
In the financial year 1 April 2008- March 2009 my income from salary is 7 lakhs.
My questions
1). Can I set off the short term losses from shares with
my salary income.
2). If not, then how and from what source can i adjust these losses and what income can i set off this short term loss.
3). Can i set off my earlier losses from shares
4).For carry forward losses and set off short term losses,which form should i take to file returns.
5) I have some income from commission as well, which is earned by selling insurance policies and for this i have got form 16 from the company which has deducted TDS for the income, could you please tell me if i can add this income with my salary income and which form to be used for this income & how would i give details of TAN no when there are only two sections of that, both of which i am already using and there is no space for third.
Please advise.
Thanks
Niraj Agrawal
I have short term losses from shares in last four years of around 5 lakhs.
Year 2006 - 2 lakhs (Approx)
Year 2007- 1 Lakhs(Approx)
Year 2008- 1 Lakhs(Approx)
Year 2009- 1 Lakhs(Approx)
In the financial year 1 April 2008- March 2009 my income from salary is 7 lakhs.
My questions
1). Can I set off the short term losses from shares with
my salary income.
2). If not, then how and from what source can i adjust these losses and what income can i set off this short term loss.
3). Can i set off my earlier losses from shares
4).For carry forward losses and set off short term losses,which form should i take to file returns.
5) I have some income from commission as well, which is earned by selling insurance policies and for this i have got form 16 from the company which has deducted TDS for the income, could you please tell me if i can add this income with my salary income and which form to be used for this income & how would i give details of TAN no when there are only two sections of that, both of which i am already using and there is no space for third.
Please advise.
Thanks
Niraj Agrawal
Author:
Dhana Prakash
Jul 22, 2009
Jul 22, 2009
Re: Single Return or multiple return for Spouse Salary
Hi Raagav,
Thanks a lot for your clarifications.
Regards,
Dhana Prakash
Thanks a lot for your clarifications.
Regards,
Dhana Prakash
Author:
Abhijit
Jul 24, 2009
Jul 24, 2009
Capital Gains and set-off
Hi,
There is a wealth of information here. Thanks for maintaining it.
I have (1) LT capital gain from equity and (2) ST capital loss from equity (3) LT capital loss from debt (4) ST capital loss from debt.
Overall I have more of (1) than all loss combined. That means ST loss, LT gain and overall positive capital gain.
Now to questions:
a) can I set off (3) with (1)
b) do I have an option to carry forward all of the losses or at least the ST losses since (1) is tax free. ITR2 (excel) does not seem to allow to carry forward ST losses if it can be set off against LT gains.
c) how much do I consider as exempt income? all of (1)?
There is a wealth of information here. Thanks for maintaining it.
I have (1) LT capital gain from equity and (2) ST capital loss from equity (3) LT capital loss from debt (4) ST capital loss from debt.
Overall I have more of (1) than all loss combined. That means ST loss, LT gain and overall positive capital gain.
Now to questions:
a) can I set off (3) with (1)
b) do I have an option to carry forward all of the losses or at least the ST losses since (1) is tax free. ITR2 (excel) does not seem to allow to carry forward ST losses if it can be set off against LT gains.
c) how much do I consider as exempt income? all of (1)?
Author:
John Desouza
Jul 25, 2009
Jul 25, 2009
Income Tax on Interest on Savings Account?
Hi, I have a Salary Account with a bank and over the 15 years it has accumulated over 8 lakh rupees. Bank paid around 20000 rs interest on this SAVINGS account, but they have not deducted any TDS for the same. Question is do I need to pay INCOME TAX for this amount. If so, under what section and where do I have to write this amount while filing the ITR-1 form. Note that I am a Salaried Employee with no other income (including Caoital gains) and my TDS is deducted directly by my employer.
Author:
Sireesh
Jul 26, 2009
Jul 26, 2009
Which form ITR1 or ITR2
Hi,
I have some short term capital losses and I want to carry them forward to next year. I am a salaried professional and my tax is deducted by my employer.
The ITR2 states its for non salaried persons only. Please inform if i have to fill ITR1 or IRT 2
Thanks,
Sireesh
I have some short term capital losses and I want to carry them forward to next year. I am a salaried professional and my tax is deducted by my employer.
The ITR2 states its for non salaried persons only. Please inform if i have to fill ITR1 or IRT 2
Thanks,
Sireesh
Author:
vathsa
Jul 27, 2009
Jul 27, 2009
ITR2: How to enter setoff losses?
Any example for enterign the carry forward loss will be helpful. Lets take the example, all these for short term capital gains.
Fin year: 2006-07 Loss: 1 Lakh Carried forward ( 1 Lakh)
Fin year: 2007-08 Gain: 50,000 Effective Carried forward (50,000)
Now while filing the ITR2 for Fin year: 2008-09, what should we enter in schedule CFL.
Loss carried:
2006-07 : 50,000 and 2007-08: Nil
or
2006-07: Nil and 2007-08: 50000 ?
Fin year: 2006-07 Loss: 1 Lakh Carried forward ( 1 Lakh)
Fin year: 2007-08 Gain: 50,000 Effective Carried forward (50,000)
Now while filing the ITR2 for Fin year: 2008-09, what should we enter in schedule CFL.
Loss carried:
2006-07 : 50,000 and 2007-08: Nil
or
2006-07: Nil and 2007-08: 50000 ?
Re: Capital Gains and set-off
Hi Abhijit,
a) No
b) you should be able to carry forward ST capital loss from equity, LT capital loss from debt and ST capital loss from debt.
c) Yes.
a) No
b) you should be able to carry forward ST capital loss from equity, LT capital loss from debt and ST capital loss from debt.
c) Yes.
Re: Income Tax on Interest on Savings Account?
Hi John,
Yes, you need to mention this in the ITR.
The income would fall under the head "Other Income".
Yes, you need to mention this in the ITR.
The income would fall under the head "Other Income".
Re: Which form ITR1 or ITR2
Hi Sireesh,
ITR2 can also be filed by salaried people. Please go ahead with filing ITR2.
ITR2 can also be filed by salaried people. Please go ahead with filing ITR2.
Re: ITR2: How to enter setoff losses?
Hi Vathsa,
It should be:
2006-07 : 50,000 and 2007-08: Nil
It should be:
2006-07 : 50,000 and 2007-08: Nil
Author:
sumit
Jul 29, 2009
Jul 29, 2009
business loss
sir ,
can i set off my bussiness lost Next year.?
means i have a loss of fifty thousand in FY 2008-09 and if i expect profit of 3 lakh next year then i compensate it in FY 2009-10 from previous year business loss in itr-4?
can i set off my bussiness lost Next year.?
means i have a loss of fifty thousand in FY 2008-09 and if i expect profit of 3 lakh next year then i compensate it in FY 2009-10 from previous year business loss in itr-4?
Re: business loss
Hi Sumit,
I am sorry, I do not have enough knowledge about business income / loss to guide you about this.
I am sorry, I do not have enough knowledge about business income / loss to guide you about this.
Author:
Prem
Jan 28, 2010
Jan 28, 2010
Do i need to file IT for small amount of loss
I have a gain of 11873(In Delivery) from share market and a loss of 15460(In interaday).So i have a total loss of aroud 4000.
Do i need to show this loss while filing my IT.
I am a salaried person and the company itself will give me my Form 16.
Do i need to attach any other form for showing this small loss.
Please clarify.
Do i need to show this loss while filing my IT.
I am a salaried person and the company itself will give me my Form 16.
Do i need to attach any other form for showing this small loss.
Please clarify.
(Follow Me)
Hi,
I come to know about how to club EMI & Pre EMI.
But if it is crossing 1,50,000 limit, how to claim rest amount towards carry forward losses?
Should we attach any document with ITR2 while stating these carry forward losses.
Last year as well there was some housing loan intrest amount + Pre-Emi was crossing 1,50,000.
But I forgot to put exeeding amount in Carry forward loasses, should I revise my previous return?
[More on claiming EMI & Pre EMI interest at "Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage"]