I made Rs 29 lakh from equities but lost all of it on bogus trading portal. Do I still have to pay income tax on the gains?

These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.

I sold shares worth Rs.5 lakh (long-term) and redeemed mutual funds worth Rs.24 lakh, largely long-term. Unfortunately, I invested the entire amount through a bogus trading portal and lost all the money. Will there still be any tax implications on these gains?

Shubham Agrawal, Senior Taxation Adviser, TaxFile.in: Taxes are due once you sell assets at a profit, which, in your case, are shares and mutual funds. The application or subsequent use of funds has no bearing on the taxability of the original sale unless the reinvestment is into a residential house as specified under Section 54F of the Income Tax Act.

In this case, you unfortunately lost the money by investing in a bogus trading portal, but the income tax law has no provision allowing any set-off or relief on this account. Taxes on long-term capital gains (LTCG) from shares will be due and payable at 12.5%, while gains from mutual funds will be taxed based on their nature (equity or debt). On LTCG from listed shares and equity mutual funds, you can also claim a basic exemption of up to Rs.1.25 lakh, subject to conditions.


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My adult son lost around Rs.1 crore due to online gaming. Can he—or we as parents— file a complaint or take the gaming platform to court? Is there any way to claim this loss as a set-off against his taxable income or receive any tax relief? Can the money be recovered?

Umesh Kumar Jethani, Founder, ApkiReturn: Since your son is an adult, he must file the complaint himself; parents cannot file on his behalf unless he grants a Power of Attorney or is incapacitated. Recovering money lost in online gaming is extremely difficult because courts typically view these as voluntary participation in “games of skill” or contractual transactions. However, if you can prove fraud (e.g. rigged games, bots, or payment theft), he can file a complaint with the Cyber Crime Cell or a consumer court.

Unfortunately, there is no tax relief for these losses. Under Section 115BBJ of the Income Tax Act, online gaming wins are taxed at a flat 30% (plus cess) on “net winnings.” Crucially, losses from online gaming cannot be set off against other income (like salary, business, or capital gains), nor can these be carried forward to future years. The loss is entirely personal and dead for tax purposes. Hope the above reply clarifies the issue.

Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com