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CS Executive · Tax Laws and Practice · Profits and Gains from Business and Profession

Under Schedule X of the Income-tax Act, 2025, how is the site restoration deduction treated relative to brought forward business losses?

The deduction is allowed before set off of losses brought forward from earlier tax years. Schedule X expressly provides this order, so the deduction is computed on business profits before the brought forward loss is adjusted.

  1. AIt is allowed after set off of brought forward losses
  2. BIt is allowed before set off of loss brought forward from earlier tax yearsCorrect
  3. CIt is allowed only if there are no brought forward losses
  4. DIt is allowed only against the loss brought forward

Explanation

Paragraph 1(2) states the deduction is allowed before allowing set off of loss brought forward from earlier tax years. So the 20% cap is computed on profits before this deduction and before the loss set off.

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