Meaning of set off of Losses under Income Tax Act, 1961:
Set off means setting of losses against profits of same head of income or may be different during the year.
Meaning of carry forward of losses under Income Tax Act, 1961:
Carry forward of losses means carrying the losses amount to be be set off against profits of one head or other head..
Provisions of carry forward of losses
1. Intra head adjustments :- intra head adjustments are relating to set off losses of same head…with profits of same head..
# but there are exceptions of it are as follows :
1. speculation losses of business :- speculation losses of business are only set off against speculation business not of any normal business profit.
2. losses of long term capital gains :- losses of long term capital gains are only set off against profits of long term capital gains.
3. losses of short term capital gains :- losses of short term capital gains are only set off against profits of short term capital gains.
4. losses from casual :- loss from lottery, crossword puzzles, or any game sort like this or gambling or betting .
5. losses from owning and maintaining horse races:- the losses of owning and maintaining horse races are only to be set off against profits of owning and maintaining of race horses.
2. Inter head adjustments :- Inter head adjustments are the adjustments of losses with other heads of income .
#but there are some exceptions of it are as follows :-
1. losses of business and business and profession cannot be set off against profits of salary head.
2. losses of capital gains cannot be set off against with other heads .
3. in case , of house property ; loss more than 2 lakhs cannot be adjusted against other head incomes .
3. Speculation business :- Speculation business losses cannot be set off against profits of normal business , it only to set off against profits of speculation business.
4. losses of long capital gains :- losses of long capital gains are only to be set off against profits of long capital gains .. not from the profits of short term capital gains .
5. losses of short term capital gains :- losses of short term capital gains are only to set off against profits of short term capital gains.
6. losses from lotteries , crossword puzzles , or any game sort like this , gambling or betting .. are only to be set off against profits of casual income .
7. losses from owning and maintaining of horses race are only to set off and carried forward against profits of maintaining of horse races .
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