Set off & Carried Forward
Set – Off Carry Forward Set – Off
Same Source Inter –
Nature of income For Assessment
under same Source under Inter – Head From
Year
head same head
Salary
Max. up to 2
House property 8 year Same Head
lakhs
Except
Non – Speculation 8 year Same Head
from salary
Speculation 4 year Same source
PGBP Specified Business u/s 35AD indefinite Same source
Unabsorbed Depreciation Cap
Except Any Income Except from
Exp on Sci. Research Cap Exp indefinite
from salary Salary
on F. Plan by Co
Short Term 8 year Same Head
CGs
Long Term 8 year Only LTCG
Owing & Maintenance race
4 year Same Source
horses
IOS
Winning from Lottery etc. Carry forward of loss under the head IOS is
Interest etc. not permissible.
SECTION PARTICULARS
70 Inter Source - Set off of loss from one source against income from another source under the same head of income
71 Inter Head - Set off of loss from one head against income from another Head
71B Carry forward and set off of loss from house property
72 Carry forward and set off of Business Losses [Non-Speculative]
73 Losses in Speculation Business
73A Carry forward and set off of Losses by Specified Business [u/s 35AD]
74 Losses under the head “Capital gains
Losses from certain specified sources falling under the head "income from other sources" [Owning & Maintaining Race
74A
Horses]
78 Carry forward and set off of losses in case of change in constitution of firm or on succession
IMPORTANT
Loss from a source, the income from which is exempt, cannot be set off against any income.
A loss cannot be set off against casual income.
Loss from lottery, card games etc. cannot be set off against any income.
Loss from activity of owning and maintaining race-horses can be set off only against income from owning and
maintaining race- horses. [ within the source]
Speculation business loss can be set off only against speculation business income. [ within the source]
However, losses from other business can be adjusted against profits from speculation business.
Loss from a Specified Business [Referred to in Section 35AD] shall be set off only against profits and gains, if any, of any
other specified business. [ within the source]
Loss from IFOS cannot be carried forward.
Loss under the head capital gain cannot be set off with other head, but it will be carried forward for 8 AY.
Speculative business loss carried forward for 4 AY
Normal business loss carried forward for 8 AY.
Specified business loss carried forward for indefinite period.
LTCG can only be set off against LTCG.
STCG is allowed to be set off against both STCG & LTCG
Loss under the head “PGBP” cannot be set off against income under the head “Salaries”
Loss under the head House Property will be setoff with other head’s income to the extent of Only ` 200,000. Excess
shall be allowed to carry forward under Section 71B.
No option is available to set off a loss or not to set off a loss
Set off of loss not permissible against unexplained income, investment etc chargeable u/s 68 - 69D
B/f losses from a business can be set off even if such business in not continued.
80 Submission of Return for Losses [Read with Section 139(3)]
the assessee must have filed a RETURN OF LOSS under section 139(3) in order to c/f and set off a loss.
Such a return should be filed within the due date u/s 139(1). [31st July/30th September/30th November
Following losses cannot be carried forward if Return of Loss is not filled within due date:
1. Loss from Non-Speculative Business under Section 72
2. Loss from Speculative Business under Section 73
3. Loss from the Specified Business (as referred in Sec 35AD) under Sec 73A (Added by FA 16)
4. Capital Loss under Section 74
5. Loss from the activity of owning and maintaining race horses under Section 74A.
following losses can be c/f even if no ROI has been filled on time]:
1. Loss from House Property carried forward under section 71B
2. Unabsorbed Depreciation
3. Capital Expenditure on Scientific Research
4. Capital Expenditure on Family Planning
NOTE : -
1. Non-Filling of Return of Loss will not affect the Inter Source Adjustment u/s 70 or Inter-head
Adjustment u/s 71 or adjustment of brought forward losses of previous year with current year Income.
2. Also, Loss of the earlier year can be carried forward to next year(s) if the return of loss of that
year(s) was submitted within due date.
79 Carry forward and set off of losses in the case of certain companies [Closely Held Companies]
if there is a change of more than 51% in sharegholding has taken place during the PY in case of closely
held company, then no loss incurred in any yr prior to PY shall c/f & set off against income of the PY
Exception : -
Eligible start-up (80-IAC)
Change take place due to death of shareholder
change take place by way of gift of shares to any relative of shareholder
Change in shareholding of Indian co (sub. of foreign co) due to amalgamation/demerger of foreign holding co
Change take place due to resolution plan approved under IBC 2016 or under 241 & 242 of companies act 2013
Change take place due to strategic disinvestment of public sector co subject to some condition
Section 79A : No set off of losses consequent to search, requisition and survey
No set off of losses allowed against undisclosed income arise consequent to search u/s 132, requisition u/s 132A,
and survey u/s 133A
Carry forward & set off losses in case of amalgamation, Demerger & Succession
Amalgamation Fresh period of 8 yr
Demerger Fresh period of 4 yr
Conversion of firm/Prop to Company Fresh period of 8 yr
Conversion of company to LLP Fresh period of 8 yr
NOTE : -
Unabsorbed dep can c/f for unlimited period
Only business losses (except speculative business loss) can be c/f by successor
