Equity Losses Can Offset Other Capital Gains: Tax
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- Equity capital losses can be set off against gains from other capital assets — including gold, property, and debt mutual funds — provided the gains are taxable under the 'capital gains' head, according to income tax rules.
- Short-term capital losses may be adjusted against both short-term and long-term capital gains, while long-term capital losses can only offset long-term capital gains.
- Equity capital losses cannot be set off against income from salary, house property rent, business, or profession, and capital gains losses cannot offset speculative business income such as intraday trading profits.
- Unused capital losses can be carried forward for up to 8 assessment years, but carried-forward long-term losses can only offset long-term gains in subsequent years.
- Capital losses can only be carried forward if the ITR is filed within the prescribed due date — 31 July 2026 for non-audit cases — making timely filing essential even when total income falls below the taxable limit.
- Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited, noted that filing the ITR on or before the due date is critical to preserve the right to carry forward and set off capital losses in future years.
Why it matters: Investors with stock market losses who skip the 31 July 2026 ITR deadline risk permanently losing the ability to carry forward up to 8 years of losses — turning potential tax savings into forfeited deductions. The rules distinguish sharply between short-term and long-term losses, meaning taxpayers who misclassify could either overpay tax or miss legitimate set-offs against property or gold gains.
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