Income Tax · Capital gains · Losses
Setting off & carrying forward losses — capital losses and F&O
✍️ Answered by EaseValue Advisors · Updated 17 Jul 2026
· 5-min read
Quick answer
A short-term capital loss can be set off against any capital gain (short or long); a long-term capital loss only against long-term gains. F&O (non-speculative business) losses can be set off against most income except salary. Unabsorbed losses carry forward — 8 years (capital), 8 years (business).
Capital losses
- Short-term capital loss (STCL): set off against both STCG and LTCG.
- Long-term capital loss (LTCL): set off only against LTCG.
- Capital losses cannot be set off against salary, business or other income.
- Unabsorbed capital loss carries forward 8 years (LTCL still only against LTCG) — if you file the return on time.
Example: LTCG ₹1,15,000 and STCL ₹1,50,000 → the STCL fully offsets the LTCG (STCL can set off LTCG), leaving ₹35,000 STCL to carry forward.
F&O and intraday losses
- F&O is a non-speculative business (Section 43(5)) — its loss can be set off against any income except salary in the same year, and a STCG can absorb an F&O loss.
- Unabsorbed F&O loss carries forward 8 years, but only against business income.
- Intraday equity is speculative — its loss sets off only against speculative income and carries forward 4 years.
Example: STCG ₹45,000 and an F&O loss ₹60,000 → the F&O business loss can be set off against the ₹45,000 STCG, leaving ₹15,000 to carry forward.
The golden rule — file on time
To carry forward any loss, you must file the return by the due date. A belated return forfeits carry-forward (except unabsorbed depreciation). See how trading is taxed.
General information based on the Income-tax Act as it stands, not advice on your specific case. Tax outcomes
depend on your exact facts and residential status. © EaseValue Advisors LLP.
EaseValue