Navigation

Subbu's Solution

Dear Subbu Sir, If I incur a loss in my stocks, can the losses be adjusted against profits from mutual funds?
A) Please refer to the table below to understand the methods to set off your losses.


Capital GainsTime FrameSet Off TypeAssets used to Set-OffConditions

Short Term Capital Losses (STCL)

Assets are known as short-term if they are held for less than a year.STCL from sale of shares or units of equity MFs with STT paid can be adjusted against Short Term Capital Gains (STCG)STCL can be set off against capital gain from investments of other Stocks and Mutual Funds, Debt and Gold ETFs, Real Estate, Physical Gold and SilverSTCL can be set off against any capital gain (Long-term or Short-term) from investments of other Stocks and Mutual Funds, Debt and Gold ETFs, Real Estate, Physical Gold and Silver

Long Term Capital Losses (LTCL)

Assets are known as long-term if they are held for more than a year.LTCL from sale of shares or units of equity MFs with STT paid can be adjusted against Long Term Capital Gains (LTCG)LTCL can only be set off against long term capital gains from investments of other Stocks and Mutual Funds, Debt and Gold ETFs, Real Estate, Physical Gold and SilverLTCG on shares where STT is paid is exempt from income tax. Hence, both LTCL and STCL cannot be set off against LTCG.*

*Eg: If you purchased 2 shares A and B as long-term investments. Suppose Share A incurred a loss of Rs. 100 and Share B received gains of Rs. 200. If you sell Share B with LTCG (Rs. 200) and paid the applicable STT, you cannot set off the gains from Share B for the losses in Share A.

You also have the choice to carry forward your losses and set them off against future profits for up to eight financial years. Remember that the sale of stocks and funds is on a first in, first out basis i.e. the shares you bought first will be sold first, followed by other funds/stocks.

Disclaimer:

Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Please visit - www.QuantumMF.com to read Scheme Specific Risk Factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the scheme's objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the Sponsor / AMC/ Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

1800-209-3863 /1800-22-3863

022 6829 3807

www.QuantumMF.com