Skip to content

CMA Intermediate · Direct and Indirect Taxation · Set off and Carry Forward of Losses

Ramesh Traders computed a speculation loss of Rs 90,000 for the tax year 2026-27 that could not be set off. For how many tax years immediately succeeding the loss year can it be carried forward under section 113?

The unabsorbed speculation loss can be carried forward for a maximum of four tax years immediately succeeding the tax year in which it was first computed, as stated in section 113(3). The eight-year limit applies to ordinary business losses under section 112, not to speculation losses.

  1. AFourCorrect
  2. BEight
  3. CTwo
  4. DIndefinitely, until it is absorbed

Explanation

Section 113(3) says no speculation loss is carried forward for more than four tax years immediately succeeding the year in which it was first computed. Eight years applies to ordinary business losses under section 112, which is why that option is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Set off and Carry Forward of Losses shows your real accuracy, how long you take and where you lose marks.

Practise Set off and Carry Forward of LossesFree diagnostic mock

More Set off and Carry Forward of Losses questions