FY23-24: Do You Have Losses from Trading? Here Are the Set-Off and Carry Forward Provisions

June 28, 2024

Could I offset my trading loss with the profits I earned on my long-term stocks and mutual funds holdings? What are the set-off rules for trading loss?

Let’s first understand how income from different transactions is classified. F&O trading is classified as a non-speculative business, while intraday trading is treated as a speculative business. Further, profits earned from stocks or mutual funds are considered as capital gains. Now, let’s talk about the rules for setting off trading losses.

Non-speculative losses, like those from F&O trades, can be offset against any other income head except salary income in the same financial year. This includes capital gains from stocks and mutual funds. So, you can set off your trading loss with the capital gains on stocks and mutual funds.

Remember, speculative or intraday losses can only be offset against other intraday profits.

In the table below, we mention the set-off and carry-forward rules for capital gains and business income.

Can you explain how to carry forward the losses from trading?

Your trading losses will first be adjusted against incomes in the current year, and the remaining losses (if any) are carried forward to subsequent years. Remember that F&O losses can be carried forward for up to 8 years, while those from intraday trading can only be carried forward for up to 4 years.

Carry-forward losses become brought-forward losses for the next year. These brought-forward losses from F&O can be offset against any kind of business income in the subsequent years, including both speculative and non-speculative business profits. On the other hand, intraday losses can be used to offset other intraday profits in future years.

For example, say you have short-term capital gains of ₹1L and face a loss of ₹3L from F&O. You can offset this loss against your capital gains, reducing your net taxable gains to zero. The remaining losses of ₹2L will be carried forward to the next year. As mentioned previously, once carried forward, F&O losses can only be set off against business income (both intraday and F&O). Hence, if you have F&O profits of ₹2L in the next year, your brought-forward losses will be adjusted, and your taxable profits will become zero.

I incurred trading losses last year but did not file my income tax return for that year. Can I use the carry-forward provision to claim the tax benefits?

A. In order to carry forward your losses, you need to file the ITR before the due date, which is 31st July of the respective assessment year. If you fail to do so, you cannot carry forward the losses.

PS: If you have any tax queries, comment below, and we will get them answered.

The above questions are answered by Surbhi Pal from Quicko. This is for informational purposes only. Consult your tax expert for individualized advice.

Content, Quicko


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16 comments
  1. Krishna Murari Sharma says:

    As per brochure deta my short term capital gain is 67000 but as per AIS it is 192000. For f.y.2023-24.which about should I enter in ITR return file. I am in great tension.
    Please clear it.

  2. Kinjal Mehta says:

    Hello

    I have carry forward loss for short term n long term capital gain of around 4 lakh
    And this year I lost fno around 6 lakh
    And short term n long term capital gain of 5 lakh
    Then is it mandatory to set off fno loss against current year of capital gain

    Or

    I can set off my this year capital gain with carry forwards loss under capital gain of previous year and pay remaining tax for capital gains and carry forward loss of fno

    Thanks in advance

  3. M Patel says:

    I am salaried employee and have not reported f and o losses for last 4 years
    Can I claim that all this year?

  4. Bharat says:

    I have a tuition income of 4 lakhs and f/o loss of 50k my current ITR will anyways be zero so I want can this 50k be careed to next year and this year I will fill itr of 4 lakhs (indirectly I don’t want to adjust this year but want to adjust this last next year is it possible)

  5. Jackson says:

    Lets say a person have incurred FNO loss of 4 lakh in FY2023 and carried forward. Then in FY2024 he has 0 income from FNO but gains from equity trading (short term) of 2 lakh. Can he set off this gain with FNO loss.
    If not as short term gain, can we show it as business gain and set off the amount?

  6. rohan patel says:

    hi,
    short term realised profit from equity – 10 lacs
    F&O loss – 12 lacs

    can this F&O loss be set off against short term equity profit?

  7. Yogesh Kumar says:

    I have F&O Loss of 80000 and short term gain of 800000. Can I fill return without audit? Turn over is 2 Crore

    I have 200000 loss in F&O few years back which is already motioned in previous ITR. Can I adjust that too in current year ITR against short term gain?

    Please advise

  8. Sai says:

    Hi, I need info about set off f&o lose

    Can I set of the f&o lose with VDA profit.

  9. Ravi K says:

    I have incurred F n O losses of few lakhs in fy 2017-18 2021-22. I reported it in ITR 3 for those years, after getting audit done.
    Now this fy 2023-24 I have not done any trading/investment etc, nor I have any profit/loss from any speculative/Non speculative/stock/mutiual fund transactions.
    So,do I have to file only ITR 3 for current year to ensure validity of those carry forward those losses ? Or can I fill ITR 1 this year and again ITR 3 next year, assuming trading profit occurs next year that may be set off against earlier losses of fy 2017-18.2021-22?

  10. Mahesh says:

    Can I carry forward intraday loss or F&O loss into next year under both new and old regime?

  11. Tyson says:

    Fno is non speculative even if it is done in intraday? Also does the order type matter?
    Like mis (intraday) or NRML(Carry forward) order effects the nature of the pnl as speculative vs non speculative for fno trades?
    Thanks!

  12. Sharad yadav says:

    What is the process ?

  13. BALAKRISHNAN MR says:

    I incurred a short term capital loss of ₹1.5 cr Last year. Though I provided the data to my CA, he outsourced to a TRP, who exactly copied from AIS & filed IT Return before July 31,2023 & this loss was not reported. I Received intimation for high value transaction, online After December 31,2023, even though intimation letter is dated December 26,2023. I Therefore could not file Revised return. So How can I claim & carry forward the above short term capital loss of ₹1.5 crore from investment in shares ?