Taxability of LTCG and LTC

[DEVKUMAR KOTHARI]

Provisions S. 10(38) - vis a vis LTC loss with STT. LTCG is taxable.LTC loss is not taxable. LTCG with STT payment is exempted u/s 10(38) in some circumstances. Exempted LTCG does not form part of income u/s capital gains and does not go in GTI. Each transaction has to satisfy test for exemption, then only exemption is allowed. LTC GAIN without STT goes in computation of income under the head capital gains. So LTC loss without STT also goes in computations.LTC Loss transactions in same circumstances( STT paid), does not attract S. 10(38). S. 10 (38) apply only to positive income which is otherwise chargeable to tax. In case of loss exemption is meaningless. Therefore, such transactions falls under computation u/h 'capital gains'. Hence enter into GTI. Such LTC Loss (STT paid) can be set off and or / c/f for set off against other LTCG. It is wrong to say that loss - LTCLOSS (STT paid) are also not allowable. Exemption u/s 10(38) does not affect computation under the head 'capital gains. Only specified transactions are exempted and they do not go into computation at all. It is not that the head 'capital gains' is exempt, or that the source of gain is exempt. The shares or units involved in transactions that yielded LTCG with STT are a separate source and those which resulted in LTCLOSS with STT are different sources. The gain being out of computation u/s capital gains. Furthermore when a transaction resulting into LTCLOSS without STT is eligible for set off and / or carry forward, then there is no justification in denying same benefit for LTC LOSS with STT. That would mean that by paying STT, one lose benefits of set off and c/f that is loss from all corners- first loss of money, then loss of STT, the loss of set off, loss of c/f benefit. Yani chortafa aur Kai guni mar. Readers views are expected.

AI Summary

Debate on Taxing Long-Term Capital Gains and Losses with STT: Section 10(38) Exemption and Set-Off Rules The discussion revolves around the taxability of Long-Term Capital Gains (LTCG) and losses (LTC Loss) in relation to Securities Transaction Tax (STT). It highlights that LTCG with STT is exempt under Section 10(38), while LTC Loss with STT is not exempt and should be computed under capital gains. The forum contributors argue that losses should be eligible for set-off or carry forward, even when STT is paid, to avoid penalizing taxpayers. The discussion critiques the complexity and perceived unfairness in tax laws, suggesting that simpler, more equitable policies are needed to prevent disputes and non-compliance.