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  Rules of Set Off and Carry Forward

Set Off and Carry Forward of Losses



When the net result of any source of income is loss, it can be set off against income from any other source, subject to the following:

Head of Income

Source

Intra Head Adjustment u/s 70

Inter Head Adjustment u/s 71

Income from House Property

Any

With any income under the same head

With any income under other head

Profit & Gains of Business or Profession



Speculative

With Speculative income only

No Adjustment

Non-speculative

Any income under the head

With any income under other head except salary

Unabsorbed Depreciation

Any income under the head

With any income under other head except salary

Unabsorbed expenditure u/s 35AD

No Adjustment

No Adjustment

Capital Gain

Long Term

With Long Term Capital Gain

No Adjustment

Short Term

Any Capital Gain

No Adjustment

Income from Other Sources

Owning and Maintaining Race Horse

Income from such activity

No Adjustment


Other

With any income under the same head

With any income under other head

No

Notes:

  1. No loss can be set off against winning from lotteries, crossword puzzles, races, card games, gambling or betting, etc. [Sec. 58(4) & 115BB]

  2. Wherever reference is given for unabsorbed depreciation, it includes reference to unabsorbed capital expenditure on scientific research and unabsorbed capital expenditure on promotion of family planning among employees.