Your Queries: Income Tax| Set off long-term capital loss on equity sale against LTCG on debt fund

September 29, 2020 3:46 AM

For all stock traders, income from sale of securities shall be classified as income from business and profession and shall have to be reported accordingly.

The net income shall be charged to tax at applicable rates.The CBDT said the deadlines have been extended in order to "provide more time to taxpayers for furnishing of Income Tax Returns".

Chirag Nangia

Can a loss of Rs 5 lakh on sale of equity (sold after one year) be adjusted with long term profit of Rs 6 lakh made from debt fund (sold after three years)?
—Sunil Kumar Shah
Long-term capital loss (LTCL) can be set off only against long-term capital gains (LTCG). Therefore, LTCL from sale of equity may be set off against LTCG from sale of debt funds. The net income shall be charged to tax at applicable rates.

I sold my land in February 2019 and deposited the money in SBI Capital Gains Savings account in July 2019 before filing ITR. I bought a flat in July 2020 using the amount. Can I file ITR 1 for FY20 as I did not purchase the flat in FY20? How do I show my purchase using the capital gains amount in my ITR for FY21?
—Kusa Kumar P
We have assumed that you had reported capital gains on sale of plot in FY 2018-19 and claimed deduction under Section 54F and disclosed the amount deposited in Capital Gain Account Scheme (CGAS) before the due date. Since you have not utilised the amount in CGAS in FY 2019-20 you may file ITR 1 to disclose income under head salary (if less than Rs 50 lakh). For FY 21 you have to disclose the amount utilised from CGAS in Schedule CG of ITR 2.

What is the maximum amount exempted for leave encashment?
—Krishna Prasad
Any leave encashed during service is fully taxable and forms part of ‘income from Salary’ (whether government/non-government employee). However, leave encashment received on retirement on superannuation or otherwise by a non-government employee is exempt from tax to the extent of least of a) Rs 3 lakh, b) leave salary actually received, c) 10 months’ average salary or d) cash equivalent of unavailed leave (calculated on the basis of maximum 30 days leave for every year of completed service). For a government employee, leave encashment is exempt at time of retirement, on superannuation or otherwise.

Do stock market traders need to submit their entire portfolio in ITR?
—Shriram P
For all stock traders, income from sale of securities shall be classified as income from business and profession and shall have to be reported accordingly.

The writer is director, Nangia Andersen Consulting. Send your queries to fepersonalfinance@expressindia.com

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