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

Rahul, a resident individual, has salary income of Rs 8,00,000 and profit of Rs 3,00,000 from a non-speculative business. In tax year 2026-27 he also incurred a loss of Rs 90,000 in speculative business A and earned a profit of Rs 40,000 in speculative business B. What is his gross total income, and what speculative loss is carried forward?

Gross total income is Rs 11,00,000 and Rs 50,000 of speculative loss is carried forward. A speculative loss can be set off only against speculative business profit, so Rs 40,000 is absorbed, the net speculative income is nil, and the balance Rs 50,000 is carried forward.

  1. ARs 11,00,000 and Rs 50,000Correct
  2. BRs 10,50,000 and nil
  3. CRs 11,40,000 and Rs 90,000
  4. DRs 10,10,000 and Rs 50,000

Explanation

Speculative loss can be set off only against speculative business profit. The loss of Rs 90,000 is set off against Rs 40,000 of speculative profit, leaving Rs 50,000 to carry forward. Net speculative income is nil, so GTI is 8,00,000 + 3,00,000 = Rs 11,00,000. Setting the loss off against non-speculative income, as in option B, is not permitted.

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