Indexation Benefit
Indexation is the process that takes into account inflation from the time you bought the asset to the time you sell it.
It is used to adjust the purchase price of an investment to reflect the effect of inflation on it. A higher purchase price means lesser profits, which effectively means a lower tax.
With the help of indexation, you will be able to lower your long-term capital gains, which brings down your taxable income.
Capital Loss
A capital loss is the loss incurred when a capital asset, such as an investment or real estate, decreases in value & is sold for a price that is lower than the original purchase price.
The income tax department allows losses to be offset within the heading ‘Capital Gains‘. Long-term capital losses can only be set against long-term capital gains. Short-term capital losses may be offset against both long-term earnings and short-term earnings.
Carry Forward of Losses
If you are unable to recover the entire capital loss in the same year, you can carry forward both the short-term and long-term loss for eight assessment years immediately after the assessment year in which the loss was first measured. When capital losses occur from a company, these losses may be carried forward, and it is not necessary to carry this onto the business. |
