Set Off and Carry Forward of Losses

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If income is taxed under income tax act then losses also can be adjusted in other income heads. Set off means adjustment of a loss against income under other sources/heads. You can also carry forward losses if you have not any other income. Here is the provisions related to set off and carry forward of losses. We will discuss these provisions one by one.

  1. Set Off within the same head of income u/s 70
  2. Set off against income under another head u/s 71
  3. Set off & carry forward losses from house property u/s 71B
  4. Set off and carry forward business loss u/s 72
  5. Set off and carry forward capital gains u/s 74
  6. Losses in speculation business
  7. Loss from the activity of owning and maintaining race horses u/s 74A
  8. Carry forward and set off of  losses in case of certain companies
  9. Carry forward and set off of losses in case of change in constitution of firm or on succession
  10. Exception to the rule that the assessee must be the same
  11. Exception to the rule that losses can be carried forward for eight assessment year
  12. Table Chart for Set off and Carry Forward of Losses

FAQ on Set Off Losses

Q.I am a part time employee and am also running a provision store. I suffered loss in business. Can I adjust the business loss against my salary income?

Loss from business/profession cannot be adjusted with salary income. Hence, you cannot adjust the business loss against your salary income.

Q. I sold gold after holding it for 13 months and suffered loss thereon. Can I adjust this loss against my salary income?

Loss on sale of capital asset is termed as capital loss and capital loss can be adjusted against capital gains only. Hence, loss on sale of gold cannot be adjusted against salary income.

Q. I have earned salary income of Rs. 8,00,000 during the Assessment Year 2018-19 and am also having loss of Rs. 3,00,000 from house property. Can I set-off loss from house property against my salary income?

Section 71 allows set-off of losses from house property against any other income. However, w.e.f. Assessment Year 2018-19, losses under the head ‘house property’ shall be allowed to be set-off only to the extent of Rs. 2,00,000 in any assessment year.

Thus, only loss of Rs. 2,00,000 can be adjusted against your salary income and loss of Rs. 1,00,000 shall be carried forward for set-off in subsequent years.

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