Tax Calculation: Here's A Capital Gains Tax Hack On How To Use Losses Smartly To Lower Your Fy26 Tax Outgo

As a payer pinch some semipermanent and short-term superior losses successful FY 2025–26, you tin optimise your taxation liability by mounting them disconnected against eligible superior gains arsenic per nan Income Tax Act, 1961. The rules for accommodation are intelligibly laid retired and must beryllium followed successful a circumstantial bid to maximise taxation efficiency. Setting disconnected superior gains taxation refers to nan process of reducing your taxation liability connected superior gains by adjusting it against superior losses you've incurred successful nan aforesaid aliases erstwhile years.

Capital gains taxation is simply a taxation imposed connected nan profits obtained from nan waste of assets for illustration existent estate, stocks, and communal funds. The taxation complaint is wished by nan long for which nan plus was held anterior to its sale, known arsenic nan holding period.

The Income-tax Act of 1961 outlines group guidelines for offsetting superior gains and losses. This enables taxpayers to deduct losses from gains effectively, yet reducing their taxation burden. The curen process differs depending connected whether nan gains aliases losses are short-term (STCG/STCL) aliases semipermanent (LTCG/LTCL).

Set-off Rules You Must Follow

Short-term superior losses (STCL) tin beryllium group disconnected against some short-term and semipermanent superior gains. This provides elasticity and is beneficial if you person gains of either benignant during nan aforesaid financial year.

Long-term superior losses (LTCL), however, tin only beryllium group disconnected against semipermanent superior gains (LTCG). They cannot beryllium adjusted against short-term gains.

If your losses transcend gains successful a fixed year, you tin transportation guardant nan remaining nonaccomplishment for up to 8 appraisal years, provided you’ve revenge your income taxation return connected time.

"If superior losses transcend gains successful nan existent year, nan remaining losses tin beryllium carried guardant for up to 8 financial years. However, to declare this benefit, taxpayers must state nan nonaccomplishment successful their Income Tax Return (ITR) connected aliases earlier nan applicable owed day of furnishing nan income-tax return. Carried-forward losses tin beryllium adjusted against eligible superior gains successful consequent years, allowing investors to maximise their taxation ratio overtime," CA Dr Suresh Surana. 

Exemption Under Section 112A (Rs. 1.25 Lakh LTCG Exemption)

In accordance pinch Section 112A of nan IT Act, nan Rs. 1.25 lakh LTCG exemption is applied earlier mounting disconnected immoderate Long-Term Capital Loss (LTCL). This intends that successful each financial year, nan first Rs. 1.25 lakh of LTCG is automatically exempt from tax, irrespective of immoderate losses. Only nan LTCG exceeding Rs. 1.25 lakh is considered for set-off against LTCL. After adjusting nan losses, immoderate remaining LTCG is past subjected to beryllium taxed. Therefore, LTCL cannot beryllium group disconnected against nan exempt Rs. 1.25 lakh LTCG, but only against nan taxable LTCG exceeding this threshold.

Carry Forward Provision

If your full superior losses are much than your gains successful FY 2025–26, nan unadjusted information tin beryllium carried guardant for 8 appraisal years—but only if you’ve revenge your return earlier nan owed day nether conception 139(1).

By pursuing this bid and complying pinch timelines, you tin trim your superior gains taxation outgo and scheme your investments much strategically for early years.

Published on: May 10, 2025 5:38 PM IST