The change in the set-off definition of long term capital losses proposed in the Finance Bill, 2002 has prompted many a corporate and individual to take stock of their equity investments and book losses in the current fiscal itself.
According to amendments in Sections 70 and 74 proposed in the Bill, long-term capital losses would be allowed to be adjusted only against long-term capital gains from April 1, 2002. This set-off can be claimed in the year under assessment or in the subsequent 8 years.
The existing provisions, which hold good only till March 31, 2002, allow long-term capital losses to be set off against both short-term and long-term gains.
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The set-off definition for short-term capital losses has been, however, kept unchanged with such losses being allowed to be set off against both long-term and short-term capital gains.
Tax consultants said that equity-oriented investments, which have been held for over a year now, should be booked before the end of the current financial year itself to make use of the benefit available till March 31, 2002.