Set Off and Carry Forward Of Losses - Income Tax Notes Part - 07
Income Tax Notes Part - 07 SET OFF AND CARRY FORWARD OF LOSSES INCOME TAX NOTES PART - 07 SET OFF AND CARRY FORWARD OF LOSSES Steps to be applied for set-off and carry forward The process of setting off of losses and their carry forward is covered in the following three steps: Step 1: Inter-source (Intra-head) adjustment under the same head of income. Step 2: Inter-head adjustment in the same assessment year (Step 2 is applied only if a loss cannot be set off under step 1). Step 3: Carry forward of a loss (Step 3 is applied only if a loss cannot be set off under step 1 and 2). Inter-source (Intra head) adjustment If the net result for any assessment year, in respect of any source under any head of income, is a loss, the assessee can set-off this loss against his income from any other source under the same head of income for the same assessment year subject to the following provisions – House property Loss from a house property can be set-off against profits of other house