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What guidelines have been established by the Income Tax Law regarding the carry forward and offset of capital losses?
Unadjusted capital losses can be carried forward to the following year if losses under the "Capital Gain during the year in the same heading cannot be adjusted in the same year.
The subsequent loss can only be offset by income subject to taxation under the heading "Capital Gains," whereas long-term capital loss can only be offset by long-term capital gains. Long-term capital gains as well as short-term capital gains can be used to offset the short-term loss.
For eight years that immediately follow the year in which the loss is incurred, such a loss may be carried forward. Only if the return of income/loss of the year in which the loss is incurred is submitted on or before the due date of filing the return, as specified under section 139(1), is this loss eligible to be carried forward.
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