Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions:

1. Classification of Capital Losses:

• Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 months of acquisition. Such losses can be set off against both short-term and long-term capital gains. If not fully adjusted in the same financial year, they can be carried forward for up to 8 assessment years.

• Long-Term Capital Loss (LTCL): Arises when securities are sold after 12 months of holding. These losses can only be set off against long-term capital gains. Unadjusted LTCL can also be carried forward for up to 8 assessment years.

2. Conditions for Carry Forward:

• Timely Filing of Income Tax Return: To carry forward capital losses, it’s mandatory to file your income tax return within the due date specified under Section 139(1) of the Income Tax Act. Failure to do so disqualifies the taxpayer from carrying forward the losses.

3. Set-Off Provisions:

• Short-Term Capital Loss: Can be set off against both short-term and long-term capital gains.

• Long-Term Capital Loss: Can only be set off against long-term capital gains.

4. Carry Forward Duration:

• Both STCL and LTCL can be carried forward for a maximum of 8 assessment years immediately succeeding the year in which the loss was incurred.