Regarding Short term gains and losses

Taxation
1

Is audit required for losses incurred in short term capital investment? (STCL)

Also if I have a loss of 500000 as Short term capital losses and I do no want to carry it forward, is there a way to declare it without carrying it forward?

2

Hi @Saik,

Tax Audit is applicable in case of income from business or profession. If the sale of shares is treated as Business Income, Tax Audit may be applicable in case of losses. If sale of shares is treated as Capital Gains, Tax Audit is not applicable.

You can report STCL under Schedule CG of ITR. You may remove the amount of carry forward loss under Schedule CFL (Carry Forward Loss) in the ITR. However, it is advisable to carry forward the loss in the ITR so that it can be a set-off with future profits to reduce taxes.
Also, it is always a good practice to file your ITR and report all your financial transactions to avoid notice from the Income Tax Department. Especially after the SEBI and CBDT’s data partnership.

You can also use this tool to determine if tax audit is applicable to you

3

Thank you for the quick response!!
So to clarify I can carry forward the loss by declaring the same in my ITR return without going through an audit( when declared under capital gains/losses section).

And the same applies for LTCL also?

4

Hey @Saik

Yes, you can carry forward the losses of STCL and LTCL by declaring the same into your ITR and filing the ITR before the due date.

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