How to Offset Capital Losses in India (2026 Rules)
The Indian Income Tax Act allows for some specific 'set-off' rules. This calculator applies the following hierarchy to ensure your tax savings are maximized:
- Short-Term Capital Loss (STCL): Highly flexible—can be offset against both STCG (20%) and LTCG (12.5%).
- Long-Term Capital Loss (LTCL): Can ONLY be offset against Long-Term Capital Gains (LTCG).
- Section 112A Exemption: Remember that the first ₹1.25 Lakh of aggregate LTCG in a financial year is tax-free. Only gains above this threshold need to be harvested for.
- Carry Forward: If your losses exceed your gains this year, you can carry them forward for up to 8 assessment years to offset future profits.
Example: Offsetting ₹5L Gain
Suppose you have a realized LTCG of ₹5L from selling stocks. You also have an unrealized loss of ₹50L in another stock.
1. Sell the losing stock to 'realize' the loss.
2. Net Taxable Gain: ₹5L - ₹50L Adjustment.
3. Tax Savings: Calculated instantly based on 12.5% rate.
Realized Gain: ₹5L
Harvested Loss: Calculated
Tax Saved: ₹44,986
Offset Rules at a Glance
Quick reference for what losses can offset which gains:
| Loss Type | Can Offset STCG? | Can Offset LTCG? | Carry Forward |
|---|---|---|---|
| STCL | ✅ Yes | ✅ Yes | 8 Years |
| LTCL | ❌ No | ✅ Yes | 8 Years |
| Business Loss | ❌ No | ❌ No | 8 Years |
Frequently Asked Questions
⚠️ Disclaimer
The figures provided by this calculator are estimates based on the inputs you provide and standard financial formulas. STOCKCALC.IN does not offer investment advice. Please consult a qualified financial advisor before making any investment decisions.