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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), Rohan has a loss of Rs 80,000 from a speculation business in a tax year. Against which income can this loss be set off in that same tax year?

A speculation business loss can be set off only against profits and gains of another speculation business. It cannot be set off against salary, house property or non-speculative business profits, because section 113(1) of the Income-tax Act, 2025 confines the set-off to speculation business.

  1. AOnly profits and gains of another speculation businessCorrect
  2. BIncome from house property
  3. CAny business profits, speculative or non-speculative
  4. DSalary income

Explanation

Section 113(1) allows a loss computed in a speculation business to be set off only against profits and gains of another speculation business. Setting it off against house property, salary or non-speculative business profit is not permitted, so those options are wrong.

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