Carry-Forward Of Loss under the head Capital Gains
Due to the application of Cost Inflation Index, there could be a loss under the head capital gains. The loss allowed to be carried forward for set off against capital gains in future for a period of 8 years. However, as per the Finance Act, 2002 the long-term capital gain can be adjusted w.e.f. AY 2005-2006 only against long-term capital gain of the year or else it can carry forward for subsequent 8 years but only against long-term capital gains.
As per Section 70 losses from transfer of short-term capital assets can be set off against any capital gains, whether short-term or long-term, but losses arising from transfer of long-term capital assets would be allowed to be set off only against long-term capital gains. Through an amendment of Section 74 of the I.T. Act, 1961, it is further provided that a long-term capital loss would be carried forward separately for eight assessment years to be set off only against long-term capital gains. However, a short4erm capital loss may be carried forward and set off against any income under the head “Capital gains”.
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