TaxFinancial Glossary
Carry Forward of Losses
Definition
The ability to offset current-year capital losses against future capital gains for up to 8 assessment years. Short-term capital losses can be set off against both short-term and long-term gains. Long-term capital losses can only be set off against long-term gains. To carry forward losses, you must file your ITR before the due date.
Why It Matters
If you book a Rs 2 lakh loss selling stocks this year, you can carry it forward and set it off against future capital gains, reducing your tax liability in profitable years. But if you miss the ITR filing deadline, you lose the right to carry forward — a costly oversight many investors make.