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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 (applicable from the June 2027 session), a loss computed in respect of a specified business referred to in section 46 can be set off in the same tax year only against:

A loss from a specified business can be set off only against profits and gains of another specified business. It cannot be adjusted against salary, house property income or profits of ordinary businesses, because section 114(1) confines the set off to the specified business category.

  1. AProfits and gains of another specified businessCorrect
  2. BIncome under the head Salary
  3. CProfits of any other business or profession
  4. DIncome from house property

Explanation

Section 114(1) restricts the set off of a loss from a specified business to the profits and gains of another specified business. Options such as other business profits, salary or house property income are outside this restriction, so a general business set off is not permitted.

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