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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), Meera Traders has a loss of Rs 80,000 from a speculation business in a tax year. She also has Rs 1,50,000 of profit from her non-speculative trading business. Against which income can the speculation loss of that year be set off?

A speculation business loss can be set off only against profits and gains of another speculation business. It cannot be set off against non-speculative business profits or other heads of income, so Meera's loss must be carried forward if there is no speculation profit.

  1. AProfit of the non-speculative trading business of the same year
  2. BOnly the profits and gains of another speculation businessCorrect
  3. CSalary income of the same year
  4. DIncome from house property of the same year

Explanation

Section 113(1) allows a speculation business loss to be set off only against profits and gains of another speculation business. It cannot be set off against non-speculative business profit, salary or house property income. Setting it off against the Rs 1,50,000 trading profit is therefore wrong.

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