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

Sunil Gupta, a resident individual, has for tax year 2026-27 salary income of ₹6,00,000 and a loss of ₹2,10,000 from house property (let-out property, interest on borrowed capital). He has no other income or brought forward losses. What is the maximum loss from house property that can be set off against salary in the year, and what happens to the rest?

The maximum set-off of house property loss against other heads is ₹2,00,000 in a year. Salary is therefore reduced to ₹4,00,000, and the balance ₹10,000 is carried forward for up to eight tax years to be set off against house property income only.

  1. A₹2,00,000 can be set off; ₹10,000 is carried forwardCorrect
  2. B₹2,10,000 can be set off in full as it is within the salary income
  3. C₹2,00,000 can be set off; ₹10,000 is lost
  4. DNothing can be set off against salary; entire loss carried forward

Explanation

Set-off of loss from house property against income under other heads is capped at ₹2,00,000 per year. So ₹2,00,000 reduces salary, giving gross total income of ₹4,00,000. The remaining ₹10,000 is carried forward for up to eight following tax years against house property income. It is not lost, so the third option is wrong.

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