How to Set off and Carry Forward of Losses

Usually Income Tax is applicable only on profit.  What if loss occurred there is no tax on loss anyway but it can be set off and carried forward against profit from other heads subject to conditions.

Business Loss

• Any loss from business (other than depreciation and speculation business loss) can be set off against any income under any head (except salaries) in the same assessment year.
•  The loss can be carried forward for 8 subsequent years
•  The loss which is carried forward can be set off against business income only

Unabsorbed Depreciation

• Any unabsorbed depreciation can be set off against any income under any head (except salaries)
• There is no limit in number of years for carrying forward the depreciation
• The carried forward depreciation  can be set off against any income under any head in subsequent years

Loss from Other Sources

• The loss from other sources can be set off against any income under any head in the same assessment year
• The loss cannot be carried forward for subsequent years and loss will be lapsed

Loss from House Property

• The loss from House Property can be set off against any income under any head in the same assessment year
• The loss can be carried forwards for 8 subsequent years
• The carried forward loss can be set off against Income from House property only