Set Off or Carry Forward of Losses

The Income Tax Act, 1961 provides detailed provisions under Sections 70 to 80 for setting off and carrying forward of losses, which are crucial for tax planning and reducing tax liability. These provisions allow taxpayers to adjust current year losses against other income in the same year (set-off) or carry forward unadjusted losses to future […]

Section 70 of the Income Tax Act, 1961, allows taxpayers to adjust losses from one source against income from another source under the same head of income in the same financial year. This is known as intra-head adjustment or inter-source adjustment. Key Features of Section 70 Applies to losses under the same head of income(e.g., business losses adjusted against business profits,

Understanding Section 71: Inter-Head Adjustment Section 71 of the Income Tax Act, 1961 allows taxpayers to set off losses from one head of income against income from another head in the same financial year. This is called inter-head adjustment and comes into play after intra-head adjustment (Section 70) has been exhausted. Key Features of Section 71 Order of Application: First apply intra-head

1. Introduction to Loss Carry Forward When losses cannot be fully adjusted in the same financial year, the Income Tax Act allows taxpayers to carry forward these losses to future years for set-off against eligible income. The rules vary based on the type of loss. 2. Key Provisions for Carry Forward & Set Off A.  Business Losses

Section 71B of the Income Tax Act, 1961, governs the carry forward and set-off of losses from house property, allowing taxpayers to optimize their tax liability by adjusting current-year losses against future income. Below is a detailed breakdown of the provisions: 1. Understanding Loss from House Property A loss under the head “Income from House Property”

Section 72 of the Income Tax Act, 1961, governs the carry forward and set-off of business losses, allowing taxpayers to adjust current-year losses against future profits. Below is a detailed breakdown of the provisions, conditions, and recent amendments: 1. Key Provisions of Section 72 A.  Eligibility for Carry Forward Applies to non-speculative business losses(speculative losses are covered

Section 73 of the Income Tax Act, 1961, governs the treatment of speculation business losses, imposing strict rules on how such losses can be adjusted and carried forward. Below is a detailed breakdown of the provisions, conditions, and practical implications. 1. What is a Speculation Business? A speculation business involves transactions where: The contract for purchase/sale of commodities,

Section 73A of the Income Tax Act, 1961, governs the treatment of losses incurred in specified businesses under Section 35AD. These rules are distinct from regular business loss provisions, with unique restrictions and benefits. Below is a detailed analysis: 1. Key Features of Section 73A A. Applicability Applies onlyto losses from businesses classified as “specified businesses” under Section 35AD. Examples

Section 74 of the Income Tax Act, 1961 governs the treatment of capital losses, providing specific rules for their set-off and carry forward. Here’s a comprehensive analysis: 1. Types of Capital Losses Capital losses are categorized based on the holding period of assets: LOSS TYPE HOLDING PERIOD TREATMENT Short-Term Capital Loss (STCL) ≤ 36 months

Section 74A of the Income Tax Act, 1961, provides specific rules for the treatment of losses incurred from owning and maintaining race horses. This provision is distinct from other loss provisions due to its restrictive nature. 1. Applicability of Section 74A Applies onlyto losses arising from: Owning race horses Maintaining race horses(including training, stabling, and related expenses). Does not