Income tax set off and carry forward of losses with chart

As a student set off always seemed to be confusing to me, every thing just seemed to be one and the same. However after getting some hang of it now it doesn't seem like a monstrous task as it used to seem at once.

I have put together this chart as under to provide a basic overview of set off without much fluff. The things that need to be taken care of are marked in bold text. Also at the end some important points are motioned which you should take care of.

Income tax set off chart

	In the same year		Carry forward (C.F)
	Under same head	Under other head	C.F Allowed	No of years
1. Income from salary	N.A	N.A	N.A	N.A
2. Income from House property	Yes	Yes	Yes	8 Years
3. Non-speculative business	Yes	Yes	Yes	8 Years
4. Speculative business	Yes	No	Yes	4 Years
5. capital gain	Yes	No	Yes	8 Years
Note: Long term capital loss can’t be set-off against short term capital gain, where as short term loss can be set off against long term capital gain .
6. Income from other sources	Yes	Yes	No	N.A
7. Maintaining of horses for races	Yes	No	Yes	4 Years

Here are some important points to remember in set off.

1. Intra head loss should be adjusted first prior to Inter head losses.

2. Carried forward losses can be only set off with the same head. In short no Inter head set off for carried forward losses.

3. Long Term Capital Loss can’t be set off against short term capital gain.

4. Capital losses can be only set off against capital gain, no inter head adjustments. (Note: loss from other head (ex: business/profession) can be set off against capital gain)

5. Loss under the head Other Sources can’t be carried forward.

6.  Business loss can’t be set off against salary.

Definition of terms used in this article.

Intra source/head: - Intra head means with the same head. For example set off of loss from one house property against gain from other is an Intra head adjustment.

Inter source/head: - Inter source means adjustment of loss from one head against gain from other head. For example: - Set off of loss from other sources against gain from house property is an Inter source adjustment.