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Set-Off Carry Forward

The document discusses the set off of losses under different heads of income in India. It states that business losses can be set off against income from any other source in the same year or carried forward for 8 years, while short-term capital losses can be set off against short-term or long-term capital gains and long-term losses against long-term gains. The order of set off is mentioned as current scientific research, depreciation, brought forward business losses, and then other unabsorbed amounts.

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Shivarajkumar Jayaprakash
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115 views3 pages

Set-Off Carry Forward

The document discusses the set off of losses under different heads of income in India. It states that business losses can be set off against income from any other source in the same year or carried forward for 8 years, while short-term capital losses can be set off against short-term or long-term capital gains and long-term losses against long-term gains. The order of set off is mentioned as current scientific research, depreciation, brought forward business losses, and then other unabsorbed amounts.

Uploaded by

Shivarajkumar Jayaprakash
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Provisions relating to INTRA HEAD and INTER HEAD set off of losses at glance

W IS SET OFF AGAINST INCOME FROM


H Salary House Business or profession STCG LTCG Casual Other
E property Speculation Non- Income sources
T speculation (Other
H than
E C.I.)
R Salary NA NA NA NA NA NA NA NA

T House property YES YES YES YES YES YES NO YES


H
E
Speculation business NO NO YES NO NO NO NO NO
L Non- speculation business NO YES YES YES YES YES NO YES
O
S STCG NO NO NO NO YES YES NO NO
S
LTCG NO NO NO NO NO YES NO NO
F
R
O Casual Income NO NO NO NO NO NO NO NO
M

Note:
 There will not be any loss from salary
 Negative casual income can not be set off against casual income
 Loss from an exempted source of income cannot be set-off against any taxable income
 Loss from illegal business can be set off against income from illegal business. Even after the such set off
the residual loss can not be set off against any other heads of income.
 If any business has been discontinued after sometime during previous year, the loss from such business
can be set off against the income of the same year in another business or profession.
 The losses must be set off against income liable to tax and not against exempted income.
Carry forward and set-off of losses
If a loss cannot be set off either under the same head or under the different heads because of absence or
inadequacy of the income of the same year, it may be carried forward and set off against the income of the
subsequent year. The following losses can be carried forward and set off against the following mentioned heads
only.
Section Loss from Carry forward and Condition/s Carried
Set-0ff only against forward
income from up to
71B House property House property Brought forward loss of AY: 1999-00 8 AYs.
or earlier years cannot be set-off
72 Non speculation business or Any business or Return must be filed on or before 8 AYs.
profession profession due date of filing return
73 Speculation business Speculation Return must be filed on or before 8 AYs.
due date of filing return
74 Capital Long term LTCG Return must be filed on or before 8 AYs.
gains Short term STCG or LTCG due date of filing return
74 A (3) Activity of owning & Activity of owning & Only if such activity is continued & 4 AYs.
maintaining of race horses maintaining of race Return must be filed on or before
horses due date of filing return
On account of Unabsorbed Any heads other than Submission of return of loss and No time
depreciation, capital ‘Income from Salaries’ continuity of business are not limit
expenditure on scientific necessary
research and family
planning
Note: for Sec.72 & 73 continuity of the business is not necessary to set-off of brought forward losses. Due date
for filing the return for individuals for the assessment year 2005-06 is 31 st July

Order of set-off:

1 Current scientific research expenditure 35(1)


2 Current depreciation 32(1)
3 Brought forward business losses 72(1)
4 Unabsorbed family planning promotion expenditure 36(1)(ix)
5 Unabsorbed depreciation 32(2)
6 Unabsorbed scientific research capital expenditure 35(4)
7 Unabsorbed development allowance 33A (2)(ii)
8 Unabsorbed investment allowance 32A(3)(ii)

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