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How to make tax gains on stock market losses

October 23, 2008

How to set-off capital losses

Accordingly, to obtain the maximum benefit one may use the following order of priority to set-off capital losses:

First, try setting off against short term capital gains not subjected to securities transaction tax (STT); this will save 30 per cent tax (since slab rates are attracted);

Second, try setting off against long term capital gains not subjected to STT and thus save 20% tax.

Last, try setting off against short-term capital gain subjected to securities transaction tax.

Where capital loss cannot be set-off and tax mitigated during the ongoing financial year, it can be carried forward to the next year provided you file a loss return along with your return of income.

In fact, you can carry forward such losses for up to eight years.

Zero tax on dividends...

Image: An investor watches share prices on a digital broadcast screen on the facade of the Bombay Stock Exchange. | Photograph: Pal Pillai/AFP/Getty Images

Also read: India, Pak begin cross-LoC trade after 61 years in J&K!

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