Does Equity Long Term Gain offsets Short Term losses – Taxation – Trading Q&A by Zerodha

I thought that Long term and Short team gains/losses belonged to different buckets from taxation perspective.

My auditor however tells that Equity Long term capital GAINS will ALWAYS offset short term capital LOSSES (but not vice versa)

please confirm… @Quicko

Your auditor is right.

STCG is taxed at higher rate than LTCG, so Govt tries it’s best to not let you carry forward your STCL to next year. And forces you to reduce / offset your STCL with LTCG which has lower tax rate.

However, LTCL cannot be offset or reduced by STCG because LTCG is itself raxed at lowest rate.

This is done to maximize Govt’s tax revenue.