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CS Executive · Tax Laws and Practice · Clubbing Provisions and Set Off and Carry Forward of Losses

Under section 113 of the Income-tax Act, 2025, a loss computed in a speculation business can be carried forward for at most how many tax years immediately succeeding the tax year in which it was first computed?

Four tax years. Section 113(3) bars carry forward of a speculation business loss beyond four tax years immediately succeeding the tax year in which it was first computed, and the loss can be set off only against profits of another speculation business.

  1. AFour tax yearsCorrect
  2. BEight tax years
  3. CTwo tax years
  4. DIndefinitely

Explanation

Section 113(3) states that no speculation loss shall be carried forward for more than four tax years immediately succeeding the tax year in which it was first computed. Eight years applies to other business losses under a different provision, so it is wrong here. It can be set off only against profits of another speculation business.

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