Thursday, October 18, 2012

Carry Forward and Set off of Losses

Carry Forward and Set off of Losses

Income under the Income Tax Act is taxable under five heads:
1. Income from salaries
2. Income from house property
3. Income from business or profession
4. Income from capital gains
5. Income from other sources

It is possible for an individual to have income under more than one head. The Income Tax Act has prescribed rules to set-off loss arising from one head against other heads of income. The process of setting off of losses and their carry forward can be dividing in following steps:

# Inter source Adjusment under the same head of income
# Inter head adjustment in the assessment year
# Carry forward of a loss.
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