Can capital gains be adjusted in the short term against long -term profits? Check out these tax -saving strategies | Mint

Learn and understand how short -term capital gains can be adjusted against long -term capital gains in India. Understand tax terms, recent regulatory updates and harvesting strategic tax loss to effectively reduce your tax liability. Optimize your capital gains tax with smart investment strategies in India. (Image: Pexel) in India, if you are an investor or trader in the stock markets, you must understand the interaction between long-term and short-term capital gain. This is crucial because it will help you optimize your tax obligations. Recent tax changes, market dynamics and regulatory updates have strengthened the discussion of how these profits are being treated. Let’s discuss these concepts in detail. Current tax regulations for capital gain from the financial year 2025-26 The capital gains in India are decided on the basis of the assets of the assets: Short-term capital gains (STCG): STCG stems from the sale of assets held less than 12 months. For listed securities, such as shares, which are subject to Security Transaction Tax (STT), STCG is charged at 20 percent. Long -term capital gain (LTCG): These capital gain relates to assets held for more than 12 months. In this case, there is no tax on profits up to £ 1.25 lakh in a financial year. Once the profit crosses this figure, the additional profit is taxed at 12.5 percent without the benefit of indexing. How is the adjustment of capital gains and losses allowed in income tax? There are specific provisions in the 1961 Income Tax Act for the construction of a capital loss: short -term capital loss (STCL): STCL can be compensated against both STCG and LTCG within the same financial year. Unadjusted STCL can be transferred to a period of eight years, enabling future possibility of compensations against any capital gains. Long -term capital loss (LTCL): It is important to remember that long -term capital loss can only be set off at long -term capital gains (LTCG). It cannot be set off against STCL. Furthermore, similar to STCL, unadjusted LTCL can be detained for eight years and executed to compensate any future LTCG profits that lower tax liability. Note: The tax provisions discussed above are only an indication of nature. Consult your tax advisor for complete clarity on these terms. How to plan and handle tax loss harvest? To combat the market fluctuations, corrections and volatility due to global inflation and the threat of Trump rates, you can use tax-loss crop techniques to save on taxes: Take losses: by selling underperforming assets to incur capital loss in short term (STCL), you can reduce their tax liability. Profits for the offset of the profits: The incurred STCL can be used to compensate taxable LTCG of profitable investments, thereby lowering the total tax liability. This simple tax loss crop technique can provide effective drugs for proper tax management and planning, especially during volatility and downturn in the market. What was the recent regulatory updates? From July 23, 2024, the union budget has made several important changes: The exemption limit has increased: The exemption limit for LTCG on shares was increased to £ 1.25 Lakh. Uniform tax rate: A standard LTCG tax rate of 12.5 percent was placed across all asset classes. This was done to eliminate prevailing differences and confusion. Indexation benefit abolished: The benefit of indexing for the calculation of LTCG has been abolished, thereby simplifying the calculation process. Complex tax regulations are therefore of the utmost importance for sensible financial management to understand the complexities of capital gains tax. It is even wise to reach out to a certified financial planner or tax consultant to clearly understand the tax changes and implications. The Income Tax Act is still developing, and through the terms to resolve losses and keep abreast of regulatory changes and updates, you can strategically plan and manage your portfolio. This way you can also lower your total tax liability. Disclaimer: The tax provisions mentioned in this article are only for information purposes and do not form financial or legal advice. Consult a qualified tax adviser for personal guidance based on your financial situation. Catch all the immediate personal loan, business loan, business news, money news, news events and latest news updates on Live Mint. Download the Mint News app to get daily market updates. Business NewsMoneypersonal Financhecan Short -term capital gain is adjusted against long -term profits? Look at these tax -saving strategies more less published: 3 Apr 2025, 04:29 PM IST