How Long Can Capital Loss Be Carried Forward?
Capital losses do not remain available indefinitely. The income-tax law prescribes a carry-forward period, and the type of capital loss determines how it can be used against later gains.
Quick Answer
Under the general capital-loss rules, eligible capital losses can ordinarily be carried forward for up to eight assessment years immediately following the assessment year in which the loss was first computed, subject to the conditions for carry-forward and set-off.
How Long Is the General Period?
The general carry-forward period for eligible capital losses is eight assessment years immediately following the assessment year for which the loss was first computed, subject to the statutory requirements.
Can Short-Term Capital Loss Offset LTCG?
Yes, subject to the applicable provisions, a short-term capital loss can generally be set off against short-term as well as long-term capital gains. Long-term capital loss is subject to more limited set-off.
Can Long-Term Capital Loss Offset STCG?
Generally, long-term capital loss can be set off only against long-term capital gains under the applicable capital-loss rules.
How Should the Loss Be Tracked?
Maintain a year-wise schedule showing the original loss, amounts set off, balance carried forward and the final expiry year. This makes later ITR preparation much easier.
Practical Checklist
- Maintain a year-wise capital-loss register.
- Use the correct loss type when setting off gains.
- Carry forward only the unabsorbed balance.
- Reconcile each year's loss schedule with the filed ITR.
Related Capital Gains Questions
- What Is Capital Gain in Income Tax?
- What Is Short-Term and Long-Term Capital Gain?
- How to Calculate Capital Gain From Shares?
- What Is Cost of Acquisition for Capital Gains?
