Set off or carry forward and set off of lossesCentral
Section 108 of Income Tax Act 2025 in hindi
CHAPTER VII
SET OFF, OR CARRY FORWARD AND SET OFF OF LOSSES
- (1)Unless provided otherwise in this Act, for any tax year, if net result of computation from any source under any head of income (other than "Capital gains") is a loss, then assessee shall be entitled to set off such loss against his income from any other source under the same head for that tax year.
- (2)Where the net result of computation of income made for any tax year under sections 72 to 90 in respect of—
- (a)any short-term capital asset is a loss, such loss shall be set off against the income, computed in respect of any other capital asset for that year;
- (b)any long-term capital asset is a loss, such loss shall be set off against the income computed in respect of any other long-term capital asset for that year.
Summary
- "Set off" means subtracting a financial loss from one source against the profit or income of another source under the same head of income.
- Generally, if your net result from any source under a head of income is a loss in any tax year, you can set off that loss against your income from any other source under that same head.
- This general rule applies unless provided otherwise in this Act, and it explicitly excludes the "Capital gains" head of income.
- For capital gains computed under sections 72 to 90, a loss from a short-term capital asset can be set off against the income of any other capital asset for that year.
- For capital gains computed under sections 72 to 90, a loss from a long-term capital asset can only be set off against the income of any other long-term capital asset for that year.
Practical examples
1Vijay runs two retail businesses. In November 2026, Business A has a loss of 3,00,000 rupees, while Business B makes a profit of 8,0,000 rupees. Under Section 108(1), Vijay sets off the loss, leaving his net business income at 5,00,000 rupees.
2In January 2027, Rekha has a long-term capital loss of 2,00,000 rupees on selling gold, but makes a long-term capital gain of 5,00,000 rupees on selling a house. Under Section 108(2), she offsets the loss against the long-term gain, leaving a net gain of 3,00,000 rupees.
FAQ
1. What does set off mean under Section 108?
Set off means adjusting or subtracting a loss incurred in one source against the income earned from another source under the same head of income.
Test yourself
Q1.Against what can a long-term capital loss be set off under Section 108?
Q2.What is the rule for setting off a loss from a short-term capital asset?
Q3.Which head of income is explicitly excluded from the general set-off rule in Section 108(1)?