Capital-loss carry-forward permits short-term losses against broader capital gains, while long-term losses remain restricted to long-term gains.

Capital losses unadjusted in the relevant tax year may be carried forward for up to eight tax years. Under Section 111 of the Income Tax Act, 2025, carried-forward short-term capital loss may be set off against capital gains from any capital asset, while long-term capital loss may be set off only against long-term capital gains. Under the earlier Section 74 framework, short-term capital loss could be adjusted against short-term or long-term capital gains, whereas long-term capital loss could be adjusted only against long-term capital gains.

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