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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, Meera incurred a speculation loss of Rs 1,00,000 in tax year 1, which she could not set off in that year. For how many tax years immediately succeeding tax year 1 can it be carried forward?

A speculation loss can be carried forward for a maximum of four tax years immediately succeeding the tax year in which it was first computed. During that period it can be set off only against speculation business profits, as provided in section 113(3) of the Income-tax Act, 2025.

  1. AFour tax yearsCorrect
  2. BEight tax years
  3. CTwo tax years
  4. DIndefinitely, until fully set off

Explanation

Section 113(3) says 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 rule, and the speculation loss is not indefinite.

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