I have a query regarding new tax regime for the AY 2024-25. I have been following the old tax regime, and reported long-term capital loss from equity market. This year, I’m planning to choose the new tax regime. I need to report long term capital gain of ₹1.5 lakh. Will I be able to set off capital gain from equity market of this FY with capital loss of previous FY, undernew tax regime? Please clarify.
Dhanoop
As per Income Tax Act, an individual (who does not have business income) can choose between regular (old) tax regime and simplified (new) tax regime every financial year. The simplified tax regime provides for fewer exemptions and deductions than the regular tax regime.
However, the set-off rules for capital loss remain the same under both regimes and there are no restrictions on set-off if an assessee changes the tax regime for assessment year 2024-25. Hence, brought forward long term capital loss from previous financial year (return filed under regular tax regime) can be set-off against long term capital gain in the assessment year 2024-25 under simplified tax regime.
I had purchased units in liquid funds and redeemed them on completion of 33 months from the date of purchase with a gain of approximately ₹40,000. I have opted for “old tax regime” and come under the 30 per cent tax bracket. In this regard, I have the following queries:
- Are the gains taxable?
- Will they be classified as LTCG or STCG or shown under “Income from Other Sources”?
- If the gains are taxable, what is the applicable tax rate?
S. Subramanyan
As per Income-tax Act, liquid funds sold or redeemed within three years from date of purchase qualify as short term capital asset and the gains from the sale or redemption are treated as short term capital gains and taxed according to the slab rate of the individual.
In the given scenario, the holding period of the asset is only 33 months (less than three years) at the time of redemption or sale. Hence, the gains arising from such redemption or sale are taxable as short term capital gains.
Accordingly, the gains need to be disclosed under the head “Capital Gains”. The tax rate (as provided in the scenario) is 30 per cent plus applicable surcharge and 4% per cent Cess.
The writer is Partner, Deloitte India
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