Income Tax FAQs

You can set off loss incurred in one business against the profit from another business. However, you cannot set off loss from a speculative business against the profit of a regular business. An example of speculative business is income from intraday trading in shares. The loss from speculative business can be set off only against income from speculative business.

You can set off loss from house property up to Rs 2 lakh against income from salaries or any other income or any other income. The house property loss in excess of Rs 2 lakh can be carried forward to the next 8 years.

You can set off short term capital loss against long term capital gain. For example, you can set off short term capital loss from sale of shares against long term capital gain from shares or mutual funds.

You can set off long term capital loss only against long term capital gain. You cannot set off long term capital loss against any other income. However, you can carry forward the long-term capital loss for the next 8 years. Such loss can be set off against long term capital gain in the next 8 years. For example, you can set off long term capital loss from sale of shares against long term capital gain on sale of mutual funds.

You can carry forward speculative loss for four succeeding years. You can set off the speculative loss only against speculative income in the next four years. For example, loss from day trading is speculative and can be set off against profit from another speculative business.

You can carry forward unabsorbed depreciation from business for an indefinite period. You can set off the unabsorbed depreciation against any income other than income from salaries.