Setting of carry forwarded LTCL n STCL to set off against LTCG

Taxation
1

I have a carry forwarded long term capital loss of Rs. 6.5 lakhs & carry forwarded short term capital loss of Rs. 3 lakhs in my it return.
This year I made a long term capital gains of Rs. 12 lakhs.

I want to know what will be my taxable income this year arising from long term capital gains after setting off with previous carry forwarded losses.

My assumption is -

Long term capital gains = 12 lakhs
Exemption of 1.25 lakhs on capital gains = 12-1.25 lakhs = 10.75 lakhs
So, long term capital gains becomes = 10.75 lakhs
Now, setting of previous carry forwarded LTCL & STCL from Rs. 10.75 lakhs = 10.75 - 6.5-3 = Rs. 1.25 lakhs

So, this year , I will have to pay a tax of 12.5% on capital gains Rs.1.25 lakhs

Is this assumption correct?

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2

No, LTCG and STCL can only be set off against each other in the year it was incurred.

For carry forwarded losses you can only set off against gains in the same category.

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3

@Arjun_Shinde

Yes, your calculation is almost right — but the loss will be set off first, and then the ₹1.25 lakh exemption will apply. So, your LTCG of ₹12 lakh will first be reduced by ₹6.5 lakh LTCL and ₹3 lakh STCL, leaving ₹2.5 lakh. After applying the ₹1.25 lakh exemption, the taxable LTCG becomes ₹1.25 lakh, which will be taxed at 12.5% under Section 112A (plus applicable surcharge and cess).