Set off your options trading loss against LTCG from shares

I had made long-term capital gains (LTCG) by selling shares of around Rs 5 lakh in FY25 and had incurred a loss of Rs 2 lakh in options. Can I set off the loss against the gains at the time of filing ITR?

—Satish Gupta

LTCG arising from the sale of listed shares (where STT has been paid) are taxed under Section 112A on gains exceeding Rs 1.25 lakh. If the transfer is before July 23, 2024, then the rate of taxation will be 10%. In other cases, it will be 12.5%. On the other hand, losses from options trading are treated as non-speculative business losses as per Explanation to Section 43(5), taxable under the head “Income from business & profession” and taxable at the applicable slab rate.

A loss from business income can be set off against any other head of income except ‘income from salary’. Therefore, your loss of Rs 2 lakh from options trading can be adjusted against the LTCG from shares. You would be required to file ITR3 in order to report these losses and claim set-off.

How can I get a tax deduction on interest paid for two home loans? The second home is let out on a company lease.

—Ravi Agarwal

You can claim a deduction on interest paid on housing loans under Section 24(b). For a self-occupied property, the maximum deduction allowed for interest paid on a home loan is Rs 2 lakh per annum. If the second home is let out, the entire interest paid on that home loan is eligible for deduction without any upper limit. The maximum loss under the head “Income from House Property” that can be set off against other heads of income is capped at Rs 2 lakh. Thereafter, unadjusted loss can be carried forward for up to eight years, where it can be set off only against “Income from House Property”.

Can I get tax deduction on education loan interest paid for the entire period of 10 years?

—Ritesh Chari

The interest paid on an education loan can be claimed as a deduction under Section 80E. The deduction is only available for interest, not the principal repayment. Further, even though there is no cap on the amount of deduction, the deduction can be claimed for only a maximum of eight assessment years, starting from the year in which the repayment begins.

Publication – Financial Express

By Neeraj Agarwala