Unadjusted loss can be carried forward for setting off
I was allotted a flat in a group housing society in Jan-2001. I sold the flat in FY2021-22 and there is capital gain out of this sale and the amount is available with me in capital gain account scheme. I am planning to sell another flat within a year where I may have long term capital loss. Can I adjust capital loss arising out of sale of second property from the gain of my first property lying in my capital gain account and pay tax only for the balance amount?
Section 74 of Income tax Act, 1961 allows setting off of long term capital losses against long term capital gains. Unadjusted loss can be carried forward for setting off. However, roll back of capital loss incurred for example in year 2 against the long term capital gains in year 1 is not permitted. You can adjust in the future and not the past. Therefore, in your case, you would not be able to adjust the gain from sale of your first property (lying in capital gains accounts scheme) against the loss that you may incur on sale of the second flat.
The writer is Partner, Deloitte India.
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