The Income Tax law does not allow setting off of capital loss against any income from other heads; it can be only set off within the 'capital gains' head
11-Apr-2017 •Research Desk
I have invested around ₹10 lakh in mutual funds (through SIP and some manual investments too) in FY 2015-16. Since the market has corrected recently, I have unrealised loss of around ₹80,000 so far. I am a salaried person making ₹16 lakh a year and I pay taxes of around ₹2 lakh. Now, if I redeem all my mutual fund units that are on loss and then immediately buy them all again the next day and continue to hold for long term as per my plan, will my unrealised loss of ₹80,000 become a realised loss and can I offset it against my income and save ₹24,000 in income tax? Is that possible? And is it a good idea? Or can realised losses be offset only against realised gains and not against actual income/salary? Unfortunately, I do not have any realised gains for this financial year.
The Income Tax law does not allow setting off of capital loss against any income from other heads; it can be only set off within the 'capital gains' head. Short term capital losses are allowed to be set off against both long term capital gains and short term capital gains. However, long term capital loss can be set off only against long term capital gains.