Click here<\/a> for everything to know about long term capital gains tax on shares.<\/p><\/blockquote>\n <\/p>\n Before we get into the rules for set-off, let’s define some terms.<\/p>\n <\/p>\n Long-term capital gains or losses<\/strong> refer to profits or losses made from the sale of equity or equity-oriented mutual funds that were held for more than a year. For non-equity assets like gold and debt, the holding period must be more than three years.<\/p>\n <\/p>\n On the other hand, short-term capital gains or losses<\/strong> refer to profits or losses made from the sale of equity or equity-oriented mutual funds that were held for less than a year. For non-equity assets like gold and debt, the holding period must be less than three years.<\/p>\n <\/p>\n Now, let’s move on to the rules for set-off. Set off is the act of reducing capital gains by deducting capital losses. For example, if you have a capital gain of Rs. 10,000 and a capital loss of Rs. 5,000, you can use set off to reduce your capital gains tax by deducting the Rs. 5,000 loss from the Rs. 10,000 gain, leaving you with a net capital gain of Rs. 5,000.<\/p>\n <\/p>\n <\/p>\n Now, let’s take a closer look at the rules for set-off.<\/p>\n <\/p>\n 1) The first rule is that a loss arising from a short-term capital asset can be set off against the gains arising from the sale of a long or short-term capital asset. For example, if you sell a stock that you held for less than a year and make a loss, you can use that loss to offset the capital gains from the sale of another stock, whether it’s a long-term or short-term holding.<\/p>\n <\/p>\n 2) The second rule is that a loss arising from a long-term capital asset can be set off only against the gains from the sale of long-term assets. For example, if you sell a stock that you held for more than a year and make a loss, you can use that loss to offset the capital gains from selling another long-term asset, such as a piece of real estate.<\/p>\n <\/p>\n 3) The third rule is that any loss under the head capital gains, whether short or long-term, can be set off only against income from the same head (capital gains). In other words, you can’t use a capital loss to offset income from sources other than capital gains.<\/p>\n <\/p>\n 4) The final rule is that short or long-term capital losses cannot be set off against any other source of income. This means that you can’t use a capital loss to offset income from sources like salary or interest.<\/p>\n <\/p>\n Wealth for your financial goals from just \u20b9500 per month. Start SIP<\/a> now.<\/p><\/blockquote>\n <\/p>\n It’s important to note that you can carry forward a capital loss for up to eight years from the date of the loss. This means that if you have a capital loss in one year, but don’t have any capital gains to offset it against, you can use it to offset capital gains in future years.<\/p>\n <\/p>\n In summary, set-off is a way to reduce the capital gains tax you owe by using capital losses to offset capital gains. The rules for set-off are:<\/p>\n <\/p>\n – Losses from short-term capital assets can be set off against gains from the sale of long or short-term assets. <\/p>\n <\/p>\n Interested in how we think about the markets?<\/p>\n Read more: Zen And The Art Of Investing<\/a><\/p>\n <\/p>\n Watch\/hear on YouTube:<\/p>\n![\"Start](\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2024\/04\/SIP-banner-1024x256.png\")
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\n– Losses from long-term capital assets can be set off only against gains from the sale of long-term assets.
\n– Losses from capital gains can only be set off against income from capital gains.
\n– Short or long-term capital losses can<\/p>\n![\"FD](\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2024\/04\/FD-Banner-9.4-03.png\")
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