I had 2.62L MF LTCG in the previous year along with 40000/- loss in Derivatives . My CA is saying that this loss cannot be compensqted against this ltcg but only against profit in commodities. Any ideas?
Yes. Derivates is considered business income. You can’t offset this against Capital Gains.
Unless the derivatives were to hedge am not sure how it can be set off against LTCG under current taxation rules.
Yes you can.
" 1. Business loss other than speculative business can be set off against any head of income except income from salary."
Set Off and Carry Forward of Losses (cleartax.in)
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This means LTCG should be shown as a business income and rules there in like maintaining books of accounts, auditing may be applicable.
Am I missing something ?
I am a salaried person, I don’t maintain account book/ledger etc. Can I show LTCG under business income without any legal/ IT implications? thanks
Yes, that’s obvious. ITR-3 with accounting where inter head set-off comes in.
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Since you have capital gains and business loss you have to use ITR3. You will have to maintain books of accounts, get an audit by a CA and then file your return (depending on your turnover) . Sep 30 is the last date to file returns if you need audit.
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Set off and carry forward are 2 different concepts.
Set off is when you can use loss under one head to adjust gains under other head, both being incomes of current year. Business income can be set off against Capital Gains, Income from House Property and Income from other sources.
Carry forward is when brought forward losses of earlier years are used to set off against current year’s gain. Here, business loss can be set off only against incomes from business/profession.
Indian Income Tax law is complex.
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Yes ofcourse. That is what is mentioned in previous responses.
My bad. I missed out on the op’s previous year part and hence the confusion.
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Sorry you cannot. Just now noticed that I missed the most important ‘t’ from can in my previous post here. Edited.
You can’t.
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If it is simplified, many people like CA, Tax professionals, ERIs like Quicko will go out of business. It’s their bread and butter.
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