Income Tax Filing: Losses In Equities And Equity Funds
Date: 16-03-2017 Views: 1039
How do you account for losses in sales of equities and equity funds during income tax filing? Here are the essentials. Edited transcripts
Udayan Ray: Welcome to FundooMoney web series on tax filing. We are discussing various aspects people need to keep in mind while filing for taxes. One of the things one needs to discuss is about losses.
Nobody wants to make losses but you do end up making losses. In this segment, we will be talking about how one needs to treat losses in equities whether it is dealing directly with shares or equity mutual funds. And how does one place them in one’s tax returns? To help us navigate these slightly painful memories is Swami Saran Sharma (eminent tax expert). Swami, welcome!
Swami, losses are painful, does the taxman give any hope relief?
0:59 Swami Saran Sharma : In case you make a loss in equities, you can carry forward the loss for the next 8 assessment years. You can adjust it against any gains which you make in the next 8 years. The only thing is that before carrying forward, you need to classify the loss as short-term or long-term.
In case you hold the shares or any equity fund for less than a year, you can carry forward the loss as short-term loss. If you have held the shares for more than a year and made a loss then it is termed as a long-term capital loss which can be carried forward also. The only difference is that in the future, when you adjust the loss against a capital gain, the treatment of short-term and long-term is different.
Short-term loss can be adjusted against long-term gains or short term gains. But long-term loss can only be adjusted against long term gains.
Udayan Ray: To repeat it, long-term loss to offset (only) with long-term gain, short-term loss with long-term gain and short-term gain. So, there is a bit of semantic going on here. Just in case you are getting a little confused, you can replay the video or audio. You can always consult a good tax expert who will be able to give you a good picture of your reality. Remember, all the information we are giving you here is a about a particular tax regulation and its treatment. You still need to know how it will pan out for you. But you can ask some smart questions thanks to this segment.
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