Library / Income-tax Act, 2025: The Professional's Master Guide

61. Case Study 14: Several Capital Assets Sold in One Year

Facts. Priya, a resident in the new regime, has salary of Rs. 20,00,000. During Tax Year 2026-27 she sells:

Asset	Holding	Gain or loss (Rs.)	Nature
Listed shares	3 years	3,00,000	LTCG under section 198
Listed shares	6 months	(1,20,000)	STCL
Debt mutual fund bought in June 2023	3 years	80,000	STCG at slab (specified fund)
Gold jewellery inherited from her mother (mother's cost Rs. 3 lakh in 2010, sold for Rs. 12 lakh)	Long-term (mother's period counted)	9,00,000	LTCG under section 197 at 12.5%
Unlisted shares	1 year	2,00,000	STCG at slab

She also has a brought forward long-term capital loss of Rs. 50,000 from Tax Year 2024-25.

61.1 Step 1: set off in the best order

The STCL of Rs. 1,20,000 can be set off against any capital gain. It is best used against gains taxed at the highest rate: her slab rate STCG (debt fund and unlisted shares) rather than 12.5% gains. Slab STCG = 80,000 + 2,00,000 less 1,20,000 = Rs. 1,60,000.
The brought forward LTCL of Rs. 50,000 can be set off only against LTCG. Against section 198 gains: Rs. 3,00,000 less 50,000 = Rs. 2,50,000; taxable after the Rs. 1,25,000 exemption = Rs. 1,25,000.
Jewellery LTCG of Rs. 9,00,000 at 12.5% (indexation is available only for land and building).

61.2 Step 2: tax

Salary less standard deduction	19,25,000
Add: slab rate STCG	1,60,000
Income at slab rates	20,85,000
Tax at slab rates: 2,00,000 up to Rs. 20 lakh plus 25% of 85,000	2,21,250
LTCG under section 198: 1,25,000 x 12.5%	15,625
LTCG on jewellery: 9,00,000 x 12.5%	1,12,500
Tax before cess	3,49,375
Cess 4%	13,975
Total tax	3,63,350

Lesson. The order of set off is chosen in the return. Using the short-term loss against slab rate gains saved her 25% of Rs. 1,20,000 rather than 12.5% or 20%. She could also have saved tax on the jewellery gain by investing the net sale proceeds in a residential house under section 86.