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CMA Intermediate · Direct and Indirect Taxation · Taxation of Individuals (including AMT) and HUF

Mr. Raman Iyer incurred a speculation loss of Rs 80,000 in the tax year 2026-27, the first year in which it arose, and had no speculation profit that year. For how many tax years immediately succeeding 2026-27 can this loss be carried forward under the Income-tax Act, 2025?

The speculation loss can be carried forward for at most four tax years immediately succeeding the tax year 2026-27 in which it was first computed, and set off only against speculation business profits in those years, as section 113(3) limits the carry forward period.

  1. AFourCorrect
  2. BEight
  3. CTwo
  4. DIndefinitely

Explanation

Section 113(3) provides that no speculation loss is carried forward for more than four tax years immediately succeeding the tax year in which it was first computed. Eight years applies to ordinary business losses, not speculation, so it is wrong.

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