Widely read:
If I switch from a loss-making fund to an ELSS would I get Capital Loss benefit (i.e. can I balance my short term capital gains elsewhere against this loss)? Can capital loss be set off only against capital gains or can it be deducted from one's taxable income?
The capital loss resulting from the sale of units can be set off against other capital gains, irrespective of your switching to an ELSS fund. If your loss is a short term capital loss, it can be offset against both short term capital gain as well as long term capital gain. But, long term capital loss can be offset only against long term capital gain. Further, as the long-term capital gain from equity based fund is exempt from income tax in India, no long-term capital loss is eligible to be offset against long-term capital gains. Unadjusted short term or long term capital loss can be carried forward for eight subsequent years.
Reply to your consequent query is that as per tax regulations, capital losses can be set-off only against capital gains. Hence, capital loss cannot be deducted from taxable income.
This article was originally published on January 05, 2009.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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