If I book some short-term capital loss in the current financial year, can I carry it to future years even though I have some gains to set it off in the current year? I am asking this question because I was employed for a part of the year and I will fall in the 10 per cent tax bracket this year. But next year I will be in the 20 or 30 per cent bracket. I want to set off my loss in the next year to get maximum tax savings. Can I do it?
- Vikalp Agrawal
According to tax regulations, a capital loss for a particular year can be carried forward only after setting it off with the gains available in that year. You cannot carry forward your losses to the next assessment year when you have gains available to be set off in the current year itself.
It is when the losses exceed gains and the gains are not enough to set it off, only then the balance loss after setting off with the current year's gains can be carried forward. The maximum period for carry forward of losses is eight assessment years succeeding the assessment year in which the loss was first computed.
This article was originally published on April 24, 2009.
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