Your Queries – Income Tax: Grandfathering provision doesn’t affect set-off of long term capital loss from equity

Earnings from share buying and selling and working towards regulation could also be declared as enterprise revenue and capital good points from investing in shares could also be declared underneath ‘schedule CG’ of the ITR type.

By Chirag Nangia

With a grandfathered price if there’s long run capital loss can we feature ahead the loss to regulate in opposition to future good points or now we have to only neglect the loss for ever? Earlier we had been displaying the loss and adjusting them with future good points.
—UM Ramachandran
With impact from April 1, 2018, long run capital good points in extra of Rs 1 lakh on sale of fairness shares, items of equity-oriented mutual funds had been made taxable at 10%. Nonetheless, with a view to defend the investor pursuits, good points as much as January 31, 2018 had been grandfathered. Grandfathering provisions that apply to shares acquired earlier than January 31, 2018, don’t have an effect on a taxpayer’s entitlement to set-off/ carry ahead long-term capital losses.

Accordingly, the long run capital losses from transfers executed on or after April 1, 2018 might be set-off in opposition to some other long run capital acquire and steadiness, if any, might be carried ahead to subsequent eight years. Notably, long run capital good points on sale of fairness shares/ fairness oriented mutual funds had been exempt as much as March 31, 2018. Due to this fact, losses from transfers effected earlier than the closing date can be handled as useless loss and shall not be allowed to be set-off.

I earned lower than Rs 20,000 in FY20-21. In March 2020, I opened a demat account and began investing and buying and selling. I made losses in each day buying and selling and brief time period investing. How ought to I file my ITR?
—Ajay Sharma
One must file ITR solely when gross whole revenue in a monetary yr exceeds the essential exemption restrict. Nonetheless, the Earnings Tax Act permits set-off and carry ahead of losses provided that the return of revenue/lack of the yr by which loss is incurred is furnished on or earlier than the due date of furnishing the return. So, despite the fact that your whole revenue is under the essential exemption restrict, with a view to carry ahead your losses and cut back your tax legal responsibility for subsequent evaluation years, it’s essential to file a return. Since you will have revenue from enterprise and career, you might declare revenue in ITR 3. Earnings from share buying and selling and working towards regulation could also be declared as enterprise revenue and capital good points from investing in shares could also be declared underneath ‘schedule CG’ of the ITR type.

The author is director, Nangia Andersen India. Ship your queries to fepersonalfinance@expressindia.com