Question

Mr Deepanshu, a 35 years old Indian citizen and resident in India in the previous year. He is conducting three different business activities (speculative and non-speculative). He also has income and losses from House property, capital gains and other sources. He is confused in setting-off and carry forward of losses from different sources among different heads on intra head and inter head basis. Help and guide him

Answer 1

Answer:

Here's your answer mate

Explanation:

If income from a particular source is exempt from tax, then loss from such source cannot be set off against any other income which is chargeable to tax.

E.g., Agricultural income is exempt from tax, hence, if the taxpayer incurs loss from agricultural activity, then such loss cannot be adjusted against any other taxable income.

If in any year the taxpayer has incurred loss from any source under a particular head of income, then he is allowed to adjust such loss against income from any other source falling under the same head.

The process of adjustment of loss from a source under a particular head of income against income from other source under the same head of income is called intra-head adjustment, e.g., Adjustment of loss from business A against profit from business B.

Restrictions to be kept in mind while making intra-head adjustment of loss.

Long-term capital loss will only be adjusted towards long-term capital gains. However, a short-term capital loss can be set off against both long-term capital gains and short-term capital gain. ... But the losses from any other businesses or profession can be set off against profits from the specified businesses

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Answer 2

Answer:

Information about income tax

Explanation:

A taxpayer who has incurred a loss from a source under a particular head of income is allowed to adjust the loss against income from any other source falling under the same head. This is called inter-source adjustment.

Such a loss may be adjusted with salary or business income, if any. However, there are two exceptions to this rule; losses under capital gains cannot be set-off with income from any other head and loss from business cannot be set off against salary income.Set off of losses means adjusting the losses against the profit or income of that particular year. Losses that are not set off against income in the same year can be carried forward to the subsequent years for set off against income of those years. A set-off could be an intra-head set-off or an inter-head set-off