How to report stock market capital loss in ITR 2

Steps to follow for filing stock market loss in ITR 2

A new retail investor might face a negative return while trading stocks. The online portals will teach him how to create Demat account but will not tell him the specific ways to recuperate from the loss suffered.

To make it simpler, here is the list of steps you need to follow for filing stock market losses in ITR 2.

Step 1: Open your Demat account and download the recent statement

Learn Demat full form, its meaning, and the services included before you choose a broker service.

Log in to your Demat account and find out the section where you can access and download the recent account statement. This statement is the summary of all your transactions done related to sale consideration, acquisition cost, acquisition date, ISIN Code, period of holding, etc

You can either download this statement from the official portal of the national depository authority or from the online 3rd party trading portal you are using. You can also ask your stock broker to extract the Demat statement.

Step 2: Income tax reporting portal

1. Open the official portal of the Income Tax Department. 

2. Choose the ‘e-file’ option and proceed to Income Tax Return. Then, click on the Income Tax Return option.

3. Select the current AY (2021-22) and choose ‘online’.

4. Proceed to the next step by selecting the ‘Start New Filing’ option. Go to ‘Individual’ and choose ‘Select ITR Form’ and then ITR 2.

Once you have the ITR 2 form displayed; proceed cautiously by focusing on the following sections.

1. Choose the ‘Schedule’ and click on ‘General’.

2. Click ‘Continue’. You will be redirected to a new webpage of ‘Schedule Summary’. On this webpage, you will discover the relevant sections (Sec 112A, Schedule Capital Gain) you need to fill in the details of your investment.

3. This is where you will need the Demat statement to confirm and input the details in every relevant section.

Here is what you get from a detailed Demat statement.

• Loss incurred from sales of stocks listed in BSE

• STT paid during the holding period for acquisition and sales.

• Long term gain from selling bonds

• Long term loss on the BSE-listed equity shares or STT paid

• Short term gain on trading equity shares (Sec 112A)

At the end of entering relevant information from the Demat statement, it will display the summary of the report. 

1. Once you confirm the accuracy of the information provided, click on Schedule CYLA. It stands for Current Year Losses Adjustments. When you choose this option, the Capital Gain Schedules will show in the Carry Forward/Set-Off Schedules.

These Carry Forward of Set-Off Schedules will seek data from the Capital gain Schedule. You will have to reenter all the details again in these specific schedules. Know that the long-term capital losses are not eligible for adjustment against the short-term capital losses. This is why the Short Term Capital Gain section remains unadjusted after Set-Off.

1. Select Schedule CFL (Carry Forward Losses). A new webpage will be displayed on the screen. Once you do this, the unadjusted capital losses of AY 2021-22 will be carried to the upcoming 8 years. If you are unable to set off capital losses under the same sections during the current financial year, you can carry forward them in the next financial year.

2. Select Schedule SI (Statement of Income) and Schedule BFLA (Brought Forward Losses Adjustment) to check the summary of capital losses and gains displayed with special rates.

Points to note

• Short-term and long-term capital losses are determined by the period of holding.

• Capital gains and losses of shares, mutual funds, bonds and debentures are covered by Section 111A of the Income Tax Act.

• Holding period of shares, debentures, bonds, etc below 12 months is considered short-term assets. For gold ETFs and debt mutual funds, it is 36 months.

This is how you can report stock market capital losses in ITR 2.

Read also:- What If Your DP Has Not Transferred Shares To Your Demat Account On T+2?