ITR-2 filing: How can stock traders and investors carry forward short-term losses of FY25?

If you are a stock market trader or a long-term investor filing income tax return (ITR) for Financial Year 2024-2025 (FY25), it is important to follow the income tax rules for carrying forward short-term capital losses (STCL). These losses can only be set off against capital gains: Short-term capital gains (STCG), Long-term capital gains (LTCG)

If you are unable to fully adjust your short-term losses in the current financial year, make sure to file your ITR before the due date. This will allow you to carry forward unadjusted losses for up to 8 assessment years, giving you future opportunities to offset them against capital gains.

"To carry forward FY25 short-term capital losses, stock traders and investors must file ITR-2 by the due date. Unadjusted losses can be carried forward for up to 8 years and set off only against future capital gains. If you miss the deadline, you will lose the benefit of carry forward," said Abhishek Soni, CEO & Co-founder of Tax2win.

"To carry forward, ensure to have the correct documentation in hand like ITR-V acknowledgment of the loss year and report these losses properly in your ITR-2. Effectively utilising this provision allows traders and investors to manage their tax liabilities over many years with the ability to turn certain losses into tax-saving opportunities so long as all details are filed before deadlines," said Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited.

ITR-2 Filing 2025: How to carry forward short-term capital losses

⦁ If you are a salaried person or investor with gains/losses from shares or mutual funds, you need to file ITR-2.

⦁ Get your broker statement, capital gains report, and check your short-term losses from shares or mutual funds.

⦁ While filling ITR-2, go to the Capital Gains section and enter your gains/losses correctly.

⦁ If you have profits, you can set off your short-term losses against short-term or long-term gains.

⦁ If some losses are left, they will go to the ‘Carry Forward’ section and can be used for the next 8 years (only against capital gains).