Loss from transfer of a short term Capital Asset can be set off against gain from transfer of any other capital asset(Long Term or Short Term) in the same year. Loss from transfer of a Long term Capital Asset can be set off against gain from transfer of any other long term Capital Asset in the same year.
If there is a net loss under the head “Capital Gains” for an assessment year, the same cannot be set off against any other head of income viz., Salaries, House Property, Business/Profession or Other Sources. It has to be separated into Short term Capital Loss(STCL) and Long Term Capital Loss (LTCL) and carried forward to next assessment year. In the next year, the STCL can be set off against any gains from transfer of any capital asset (Long term or Short term) and LTCL can be set off against gains from transfer of long term capital asset only. Any unabsorbed loss after such set off can be further carried forward to next assessment year.
Capital loss computed in an assessment year can be carried forward for eight assessment years and set off as above.
Since the non promoter holding in RIL is worth about Rs 1.5 lakh crore rupees,there can be about Rs75,000 crore rupees of capital loss available for the taking.Since bulk of the money in country is in form of land,this is a very attractive option for bringing that on the books at its real price.And this is all perfectly legal. This loophole has existed for a long time but RIL being the largest Indian company in terms of Market capitalisation and the ratio of 1:1 probably makes it ptentially the biggest tax amnesty scheme so far.