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

Under the Income-tax Act, 2025, a speculation loss of ₹1,20,000 first computed in a tax year is not fully absorbed. For how many tax years immediately succeeding the year of the loss can it be carried forward?

The speculation loss can be carried forward for a maximum of four tax years immediately following the tax year in which it was first computed. After that period, any unabsorbed amount lapses and cannot be set off against later profits.

  1. AFourCorrect
  2. BEight
  3. CTwo
  4. DIndefinitely

Explanation

Section 113(3) provides that no speculation loss can be carried forward for more than four tax years immediately succeeding the tax year in which it was first computed. Eight years is the period for other business losses and is wrong here.

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