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Sudhanshu Ranade

Chennai, Oct. 12 As a general rule, long term capital gains on shares (which are not taxable), are better than short term capital gains (the tax on which was increased this year to 15 per cent).

But there are two important exceptions to this rule. The first, namely that a short term capital gain is better than no gain at all, is obvious. The second point is not at all obvious, and is therefore worth repeating. This is that short term capital losses can be set off or carried forward for offsetting against taxable capital gains for eight successive assessment years. No such relief is available for long term capital losses.

So there is no time to lose if you acquired shares in October or November last year. Ignoring the temptation to quietly wait it out because ‘things are unlikely to get worse’, it is better to sell the shares, book a short term capital loss, and then, if you so choose, immediately buy those very shares back again.

The operative word is ‘hurry’. Tomorrow it might be too late.

There is still some time to go for those who acquired shares after the market crashed in January 2008. But for them, too, time is running out.

More Stories on : Tax free income | lth tax and capital gains | Stock Markets

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