Equity Loss in ITR? 3 Set-Off Rules You Must Know
When you sell stocks or mutual funds at a loss, you can use that loss to reduce your tax bill — but only against specific types of gains. Get the bucket wrong, and the benefit disappears entirely.
One wrong box in your ITR can waste a loss worth ₹50,000 in tax savings
You lose tax savings if you set off capital losses the wrong way
Key Takeaways
Check your AIS (Annual Information Statement) on the Income Tax portal to see all capital gains and losses reported automatically for FY2024-25.
File ITR-2 (not ITR-1) if you have any capital gains or losses — ITR-1 does not allow you to report or carry forward capital losses.
Carry forward any unadjusted capital loss for up to 8 assessment years — file your ITR before July 31 to preserve this right, a late return forfeits it.
When you sell stocks or mutual funds at a loss, you can use that loss to reduce your tax bill — but only against specific types of gains. Get the bucket wrong, and the benefit disappears entirely.
Here's what happened: Capital gains in India are split into strict buckets — equity and non-equity — and losses from one bucket cannot freely offset gains in another.. Short-term capital loss (STCL) on equity can be set off against both short-term and long-term capital gains from any asset class.. Long-term capital loss (LTCL) on equity can only be set off against long-term capital gains — not against short-term gains from any asset..
What you should do: Check your AIS (Annual Information Statement) on the Income Tax portal to see all capital gains and losses reported automatically for FY2024-25.. File ITR-2 (not ITR-1) if you have any capital gains or losses — ITR-1 does not allow you to report or carry forward capital losses.. Carry forward any unadjusted capital loss for up to 8 assessment years — file your ITR before July 31 to preserve this right, a late return forfeits it..
Long-term capital loss on equity (sold after 1 year) can offset LTCG from debt funds, gold, or property — a powerful cross-asset tax move most investors miss.
File Your ITR Smart
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- [1]“Income-tax returns: Can taxpayers set off equity losses against non-equity gains? Here's what the expert says…” mint - money · 7 Jun 2026
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