How are capital losses treated for tax purposes in India?

Capital losses can be adjusted against capital gains as per Section 70 of the Income Tax Act, 1961. Long-term capital losses can be set off against long-term capital gains, and short-term capital losses can be set off against short-term or long-term capital gains. Unabsorbed capital losses can be carried forward for 8 assessment years as per Section 74. Finance Act 2025 has not introduced any changes to the capital loss set-off provisions. Supporting Case Law: CIT v. Vijay Solvex Ltd. (2012) – Supreme Court – Civil Appeal No. 4476/2012 – Link: https://indiankanoon.org/doc/109842844/ – Ratio: The court upheld the provisions for set-off and carry forward of capital losses under Sections 70 and 74. Current Status: The capital loss set-off and carry forward provisions are well-settled, though disputes may arise regarding computation and valuation.

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Prashant Thakur

The author has spent more than 30 years in the field of taxation. Wrote four books -3 on on Indian Tax Law and 1 on US tax law for cryptocurrency. Apart from https:taxworry.com , he also writes on https://irstaxapp.com which is for US tax laws. He is a tech enthusiast and manages a cloud computing company that publishes innovative software.