Can the money lost in share market, be adjusted in income tax ?

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  1. rabindra nath singh

    rabindra nath singh New Member

    I have lost money in share market trading/ investment , in this financial year (2014-2015). Will I be able to adjust this lost amount in income tax , in this financial year or even the subsequent years.? Also please let me know if I have to file ITR2 or ITR 1 in the financial year 2015-16 .

    Please note I am a pensioner and filing ITR1 regularly.

    Looking forward to your valuable replies.

    Thank You
    Rabinda Nath Singh
  2. Shishir Nayak

    Shishir Nayak Member

    As per Section 71 of the Income Tax (IT) Act, 1961, if the net result of the computation under any head of income for any assessment year is a loss, the assessee can set off the loss against his income assessable for that assessment year under any other head of income. This rule of inter-head adjustment is subject to exceptions such as loss under, ‘Profit and gain from business or profession', against salary income; loss from speculative business; loss from specified business under Section 35AD of the IT Act, loss under capital gain; and loss from activity of owning and maintaining race horses.

    Long-term capital gain on any listed shares in a stock exchange is exempt under Section 10(38) of the IT Act. Any loss from such transactions is not be eligible for set-off or carry-forward.

    Hence, if your loss in the stock market is considered as business loss, then it is covered by loss and profit or gain in business against salary income. Thus, business loss cannot be set off against salary income. If the loss is treated as speculative loss or capital loss, then it would be covered by the exception, ‘Loss from speculative business' and ‘Loss under capital gain'. Hence, the loss cannot be set off. Also, capital loss is not allowed to be set off if the capital gain on sale of such shares is exempt under Section 10(38).
  3. gaurav_kumar

    gaurav_kumar Well-Known Member

    No, this amount cannot be adjusted in your income for this year

    However, you can carry forward this amount to the next year and adjust it against profits that may arise in future
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