SET-OFF AND CARRY FORWARD OF LOSSES
SET-OFF AND CARRY FORWARD OF LOSSES

The Act contains several provisions to provide relief to the assessees, through which they can claim several benefits to minimize their tax liability. To the common taxpayer, income tax is a crunch into the income earned. Accordingly, awareness of the relevant provisions pertaining to set off and carry forward of losses as provided under the Act is essential in order to maximize tax benefits.

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Losses permitted to be carried forward and set-off

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Note:

  • From FY 2017-18 onwards, if in any year, the assessee incurs a loss under the head ‘Income From House Property’, he shall be permitted to set off such loss only up to a maximum of INR 2,00,000.

  • The losses mentioned above may not be permitted to be carried forward if the return of loss for that year is not filed on or before the prescribed due date for filing returns. However, loss under the head “Income from House Property” can be carried forward even if the return has not been filed.

Point To Remember

  • In order to carry forward losses from heads other than “Income from House Property”, it is necessary to file Return of income within prescribed due date.

  • Both intra-head and inter-head set-off of losses is permitted in the same year.

  • Only intra-head set-off of losses is permitted for losses carried forward from previous years.

  • Loss under the head Income from Other Sources cannot be carried forward.