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Income Tax Act 2025 · Losses

Set-off & Carry-forward of Losses — Income-tax Act 2025

How losses under one head can be adjusted against other income, which losses can be carried forward, and the special rules for capital, business, house-property and speculative losses.

Chapter VII of the Income-tax Act, 2025 decides how you can use a loss — set it off against other income in the same year, and carry the unused part forward to future years. The rules differ by the type of loss:

  • Capital losses — long-term losses set off only against long-term gains; carried forward up to a limited number of years.
  • Business losses — set off against most income (not salary) and carried forward.
  • Speculative & F&O losses — special restrictions apply.
  • House-property loss — set-off against other heads is capped per year, with the balance carried forward.

These rules are especially important for traders and investors. See the sections below and ask in the discussion for your specific case.

Sections in this topic

§108
Section 108 of the Income-tax Act, 2025 — Set Off of Losses Under the Same Head of Income
Set off of losses under same head of income
§109
Section 109 of the Income-tax Act, 2025 — Set Off of Losses Under Any Other Head of Income (Inter-Head Set-Off)
Set off of losses under any other head of income
§110
Section 110 of the Income-tax Act, 2025 — Carry Forward and Set Off of Loss from House Property
Carry forward and set off of loss from house property
§111
Section 111 of the Income-tax Act, 2025 — Carry Forward and Set Off of Loss from Capital Gains
Carry forward and set off of loss from Capital gains
§112
Section 112 of the Income-tax Act, 2025 — Carry Forward and Set Off of Business Loss
Carry forward and set off of business loss
§113
Section 113 of the Income-tax Act, 2025 — Carry Forward and Set-off of Speculation Business Loss
Business
§114
Section 114 of the Income-tax Act, 2025 — Set Off and Carry Forward of Losses of Specified Business
Set off and carry forward of losses computed in respect of specified business
§115
Section 115 of the Income-tax Act, 2025 — Set Off and Carry Forward of Losses from a Specified Activity (Owning and Maintaining Race Horses)
Set off and carry forward of losses from specified activity
§116
Section 116 of the Income-tax Act, 2025 — Carry Forward and Set-off of Losses on Amalgamation or Demerger
Or demerger, etc
§117
Section 117 of the Income-tax Act, 2025 — Carry Forward and Set Off of Accumulated Loss in Amalgamation of Banking Companies (and Government Insurers)
Amalgamation in certain cases
§118
Section 118 of the Income-tax Act, 2025 — Carry Forward of Loss on Reorganisation of Co-operative Banks
Reorganization of co-operative banks
§119
Section 119 of the Income-tax Act, 2025 — Carry Forward and Set Off of Losses Not Permissible in Certain Cases
Carry forward and set off of losses not permissible in certain cases
§120
Section 120 of the Income-tax Act, 2025 — No Set-off of Losses Against Undisclosed Income (Search, Requisition, Survey)
Sition and survey
§121
Section 121 of the Income-tax Act, 2025 — Filing Your Return on Time to Carry Forward Losses
Submission of return for losses

Frequently asked questions

Can I set off capital losses against salary?
No. Capital losses can only be set off against capital gains (long-term losses only against long-term gains), not against salary.
How long can losses be carried forward?
It depends on the loss type — most business and capital losses can be carried forward for a limited number of years, subject to conditions such as timely return filing.
Disclaimer: Educational overview of the Income-tax Act, 2025 (effective 1 April 2026), not professional advice. Confirm your position with our team before acting.

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§108 — Section 108 of the Income-tax Act,...§109 — Section 109 of the Income-tax Act,...§110 — Section 110 of the Income-tax Act,...§111 — Section 111 of the Income-tax Act,...§112 — Section 112 of the Income-tax Act,...§113 — Section 113 of the Income-tax Act,...§114 — Section 114 of the Income-tax Act,...§115 — Section 115 of the Income-tax Act,...§116 — Section 116 of the Income-tax Act,...§117 — Section 117 of the Income-tax Act,...§118 — Section 118 of the Income-tax Act,...§119 — Section 119 of the Income-tax Act,...§120 — Section 120 of the Income-tax Act,...§121 — Section 121 of the Income-tax Act,...

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