Set off and carry forward of capital loss

[anil kalia]

Whether any capital loss on the transactions not covered under section 10(38) or section 111A is required to be set off against income on transactions covered under section 10(38), to determine the carry forward loss to be yet off in future as per the provisions of Income Tax Act

[Mukesh Kumar]

Provisions of Section 74 read with section 70(2) of the Income Tax are being looked into so address the your query. As per my understanding the loss incurred on a capital assets which is not eligible for exemption under section 10 or otherwise, there is no provision to set off such loss with the income which is exempt from the tax under section 10 since it is not forming part of taxable income or gross total income.

AI Summary

Capital loss set-off: losses on non-exempt capital assets cannot be offset against exempt capital gains, affecting carry-forward. Losses on capital assets that are not exempt cannot be set off against income exempt under section 10 because exempt income is not part of taxable income or gross total income; accordingly, the set-off and carry-forward provisions (notably the principles in Section 74 and Section 70(2)) preclude using exempt capital gains to absorb non-exempt capital losses for carry-forward calculations.