Claiming Refunds for Short-Term Capital Gains Tax Deductions Made by Brokerages

Tax Benefits for Short-Term Capital Gains

The Income Tax Act provides individuals with the opportunity to set off short-term capital losses against short-term capital gains on which tax has already been deducted. The Ask Wallet Wise initiative offers expert advice on personal finance and money-related queries, and readers can email their questions to [email protected] for a response.

For those who have earned short-term capital gains from listed shares up to February 2025-26 and had tax deducted by their broker, there is a possibility to claim a refund. However, it is essential to clarify the tax deduction process. If the individual is not a non-resident for income tax purposes, the broker should not have deducted any tax at source on capital gains. In such cases, readers should seek clarification from their broker and verify the tax deducted from their Annual Information Statement (AIS) on the income tax website.

To take advantage of the tax benefits, readers can file their income tax return and set off the short-term capital losses against the short-term capital gains on which tax has already been deducted. The losses incurred during March on shares sold can be claimed against the gains, resulting in a potential refund for the tax deducted by the broker.

Read also: Correcting Credit Score Errors: A Guide to Ensuring Accurate CIBIL Reports and Optimal Loan Eligibility

Note that notional losses, which arise from shares that have depreciated in value but have not been sold, cannot be claimed as tax benefits.