Your queries on income tax: No limit on F&O losses set-off, but can’t adjust against salary

There is no monetary limit. As per Section 43(5) of the Income Tax Act, income or loss from F&O transactions is classified as business income or loss, as the case may be. Therefore, loss from options trading would fall under the general set-off rules for business loss under Section 71, i.e., business loss can be set off against income from any other head in the same financial year — including STCG/LTCG from your cash/equity segment — with the sole exception of salary income. So the entire loss (whatever be the amount) can be set off in the same year, subject only to your total income from other heads. Any unabsorbed balance can be carried forward for eight years, but from the following year it can only be set off against future business income and not capital gains.

l Can I claim tax benefit on HRA received if I own a house in another city and is kept vacant?

Yes, you can. HRA exemption only requires that the house you’re living in is rented — it doesn’t matter if you own a house in another city. So HRA exemption will be available as long as you live in a rented apartment, even though you may own a house in another city, and irrespective of whether that house is vacant or occupied. One catch: exemption on HRA is only available under the old tax regime.

l I have retired from service and have income of Rs 10 lakh from deposits and dividends. I did not file ITR as income is below Rs 12 lakh a year. Will it create a problem later?

 As per law, you must file an ITR if your gross total income for the year is more than the basic exemption limit, which is Rs 4 lakh under the new tax regime (computed before deductions and before the rebate is applied). Someone earning Rs 10 lakh under the new regime pays no tax because of the rebate provided by the Act, but their income is still well above the exemption limit of`4 lakh, so they must file a return. It is important to note that tax payable and the obligation to file a tax return are two separate requirements. So if your deposit interest plus dividends exceed Rs 4 lakh gross, you should file your tax return. Practically: file now as a belated return for the year in question if the window is still open. Non-filers run the risk of receiving a notice from the tax department, and you also permanently lose any TDS refund that may be owed to you if you don’t file.

The writer is senior partner, Nangia & Co LLP. Send your queries to fepersonalfinance@expressindia.com

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Investors should assess their financial goals, risk appetite and consult a qualified financial advisor before making investment decisions.

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