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CA Intermediate · Taxation · Set-Off or Carry Forward and Set-off of Losses

Meera Nair, a resident individual, runs a retail business in Kochi. For tax year 2026-27 her business shows a loss of ₹4,00,000 under the head 'Profits and gains of business or profession'. She also has income from house property of ₹1,50,000 (net annual value computed income) and interest on bank deposits of ₹60,000 taxable under 'Income from other sources'. Ignoring any brought forward losses, what is her gross total income for the year after inter-head set-off?

Gross total income is nil, and ₹1,90,000 of business loss is carried forward. Current-year business loss can be set off against house property and other sources income (₹2,10,000 in total), but not salary, so the balance of ₹1,90,000 remains unabsorbed.

  1. A₹0 after set-off, and ₹1,90,000 of loss carried forwardCorrect
  2. B₹1,50,000 only, since business loss cannot be set off against other sources income
  3. C₹0 after set-off, with ₹1,90,000 loss carried forward, as business loss cannot be set off against house property
  4. D₹0 after set-off, with no loss to carry forward further

Explanation

Current year business loss can be set off against income under any head except salary. House property ₹1,50,000 plus other sources ₹60,000 = ₹2,10,000. Loss of ₹4,00,000 absorbs all of it, leaving ₹1,90,000 unabsorbed business loss. Gross total income is nil and the balance is carried forward. The third option is wrong because business loss can be set off against house property income. The fourth ignores the remaining loss.

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