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Set Off and Carry Forward of Losses – Capital Gains and House Property

This article talks about the complicated matter of set off and carry forward of losses. It explains what set off and carry forward means, and talks about the treatment of the most commonly encountered losses – Capital loss and loss from house property.

We all know we have to pay income tax on any income that we earn or profit that we make.

But what about losses? If we pay the government when we make a profit, shouldn’t the government pay us when we make a loss? That would be wonderful, wouldn’t it?

Well, something like that can happen only in a fantasy world.

But the income tax laws provide for something very similar – you can set off your losses against your profits, and can even carry them forward to subsequent years.

Don’t understand what this means? Here’s a detailed explanation.

 

What is Set Off of Losses?

When you have a loss under one of the heads of income (like income from house property), and for the same year, you also have a profit (or income) under the same or some other head of income, you can reduce your profit / income by the amount of the loss.

This means that your total income also gets reduced by that much, and you end up paying that much lesser income tax!

For example, if you have a loss of Rs. 1 Lakh from the head “income from property”, and you set it off against your “income from salary”, your income for that year gets reduced by Rs. 1 Lakh. Now, if you are in the 30% tax bracket, you would end up saving Rs. 30,000!

(And since money saved is money earned, in effect, its equivalent to getting something back from the department of income tax!)

 

What is Carry Forward of Losses?

If your income / profit is less than your loss, you would not be able to set off the full loss. In such a case, you can carry forward the loss to the next year, so that you can set it off against your income / profit in the subsequent year(s).

Now, the rules around carry forward and set off of losses are relatively complex – not all types of losses can be set off against income from another heads, and there are rules restricting carry forward of losses as well.

Let’s try to understand some most commonly encountered rules – about capital loss and loss from house property – in detail.

 

Basic Rules Regarding Set Off and Carry Forward of Losses

1. A very important rule to remember is that losses that are carried forward have to be set off against income from the same head in the subsequent years – they can not be set off against income from any other head of income.

For example, if you have a loss from house property, you can set it off against income from house property or income from salary in the year of the loss. But if you carry it forward, in the next year, you can set it off only against income from house property.

2. A carried forward loss can be set off against income in subsequent years only if the loss has been declared in the income tax return filed by you.

Additionally, if you have:

  • A loss under the head capital gains, or
  • Speculation business loss, or
  • A loss under the head income from business or profession, or
  • Loss from the activity of owning and maintaining race horses,

You have to file a loss return (or a return of loss) as per section 139 (3) if you want to carry forward the loss to subsequent years.

3. A loss for a particular year can be carried forward only if the income tax return for that year is filed by the due date. The only exception to this rule is loss from house property – this loss can be carried forward even if the IT return is not filed in time.

4. Loss from a source of income which is exempt from income tax (for example, an agricultural loss) can not be set off against income from a taxable source of income.

5. Loss from none of the heads of income can be set off against winnings from lotteries, horse races, gambling, etc. The losses from these can not be set off even against income from lotteries, horse races, gambling, etc!

 

General Steps in Set Off and Carry Forward of Losses

There are three stages or steps involved:

Step 1: Inter source adjustment under the same head of income.

If you have a loss under a particular head of income, you are allowed to set it off against an income from the same head.

For example, a short term capital loss from selling one set of shares can be set off against a short term capital gain from selling another set of shares.

Step 2: Inter head adjustment in the same assessment year. This step is applicable only if it is not possible to set off a loss under Step 1.

For example, a loss from house property can be set off against your income from salary.

Step 3: Carry forward of loss. This step is applicable only if it is not possible to set off a loss under Steps 1 and 2.

 

Set Off and Carry Forward of Capital Losses

Long term capital loss can be set off only against a long term capital gain.

Short term capital loss can be set off against any capital gain – long term or short term.

Both long term and short term capital losses can not be set off against income from any other head of income.

Any capital loss remaining after set off can be carried forward for upto 8 years.

A capital loss for a particular year can be carried forward only if the income tax return for that year is filed by the due date.

 

Set Off and Carry Forward of Losses from House Property

A loss from house property can be set off against income from any other head in the same year.

Any remaining loss can be carried forward for upto 8 years. In these subsequent years, this loss can be set off only against income from house property.

A loss for a particular year can be carried forward even if the income tax return for that year is not filed by the due date.

 

Please also read:

- “Long Term and Short Term Capital Gain – Income Tax Calculation

- “Long Term Capital Gains (LTCG) on Sale of a House – Calculation and Income Tax

- “How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House

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  1. Anonymous says:

    [Asked by a reader Nitin at "Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage" - I have put it here as this is a more relevant place]

    Hi,

    I come to know about how to club EMI & Pre EMI.

    But if it is crossing 1,50,000 limit, how to claim rest amount towards carry forward losses?

    Should we attach any document with ITR2 while stating these carry forward losses.

    Last year as well there was some housing loan intrest amount + Pre-Emi was crossing 1,50,000.

    But I forgot to put exeeding amount in Carry forward loasses, should I revise my previous return?

    [More on claiming EMI & Pre EMI interest at "Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage"]

  2. Anonymous says:

    The upper limit of claiming the interest (incuding pre-EMI interest) u/s 24 is Rs. 1,50,000.

    Thus, the maximum that you can claim in any given year is Rs. 1.5 Lakhs.

    This amount claimed u/s 24 would be a negative amount, as it is an expense. It should be set off against any income that you have from another house property.

    Any remaining loss should be set off against income from salary, etc.

    If, after this, any loss still remains, you can carry forward it to the subsequent years.

    So, to answer your questions:

    If interest component of EMI + pre-EMI interest is more than Rs. 1.5 Lakhs in a year, the amount over and above Rs. 1.5 Lakhs can not be claimed u/s 24.

    (So, speaking from a tax savings point of view, this amount goes “waste”!)

    Therefore, it can not be carried forward to the next year.

    Only the amount (within the limit of Rs. 1,50,000) that can not be set-off against income from any of the heads can be carried forward to next year.

    This also means that you do not need to revise the income tax returns for the last year.

  3. hello sir- i have the following questions wrt long term capital loss arising out of sale of shares -

    1. can i reset long term capital loss arising out of sale of shares in the same year against long term gains from shares, real estate etc…
    2. can i carry forward long term capital loss arising from the sale of shares?
    3. if yes, then against what can i offset these losses

  4. Anonymous says:

    Hi Venkat,

    Long term capital gain from sale of shares is not taxed at all. Therefore, the loang term capital loss from shares can also not be set off against any other gain.

    Keeping this in mind, following are the answers to your questions:

    1. No

    2. No

    3. Not applicable

  5. Anonymous says:

    Hello Narayan,

    1. No.

    2. Capital loss – short term or long term

    3. Yes. You can carry forward your loss for upto 7 years.

    4. No forms need to be filled. In the capital gains section in the ITR, mention your loss, and carry it forward to the next year. There are relevant fields in the ITR.

  6. Narayan Reddy says:

    Hello sir,

    I have short term losses from shares of around 5 lakhs this financial year(April 2008- March 2009) and my income from salary is 6.5 lakhs.
    1). Can I set off the short term losses from shares with
    my salary income.
    2).Suppose if not possible,with what income can i set off this short term loss.
    3)As of now I have no plans to invest in shares till 5 years.And I am planning to invest after 5 years.So can i set off this year losses with the short term gains if at all gained after 5 years.
    4).For carry forward losses and set off short term losses,what are the forms to be submitted while filing tax returns.

  7. Sundar S says:

    Dear Sir,

    Your site is perhaps THE ONLY RAY of sunshine in this area -I say this after regularly buying the NABHI Ready Reckoners etc NOT a single actual sample form is available anywhere -too much to expect the geniuses at the IT Dept to include a sample filled up Form !

    For the benefit of all of us (I am positive many will agree),I beh you to throw some light on the stuff below :-

    More on How to fill up Form ITR 2 (or any):-

    Schedule CG-OS :-

    Does one mention Long Term Cap gains (on purchase/sale of shares subjected to STT) in Schedule CG-OS ? After all the income is tax free -so does one include it in the Return (apart from in Schedule EI (Exempt income) ?

    Also how does one fill up Section D in this schedule (the online version allows no negative numbers) I refer to the date wise breakup of Long and Short Term Gains :- ie :- Upto 15/9 16/9 to 15/12 16/12 to 15/3 16/3 to 31/3 How does one fill up the above say if one has a loss upto 15/9 (say Minus -30000), a net gain of 60000/ by 15/12 ie * a actual gain of 90000 -which wipes out the loss of 30000 in earlier quarter etc etc ). Say by 31/3 one ends up with a NET LOSS -how does one actually ENTER these realities in a form THAT WILL NOT ALLOW NEGATIVE NUMBERS ?

    Schedule EI :- Clarity on where to include interest earned on PPF (whether in (1)Interest income which may also include interest from Tax Free Bonds etc or in (5) Others,(including exempt income of minor child)

    Schedule AIR :- Require a proper explanation (with examples) of all the codes mentioned for eg :- Code 005 = “Payment made by you of an amount of one lakh rupees or more for acquiring shares issued by a company” -DOES THE ABOVE include shares bought on the BSE /NSE exchanges ? etc What happens when bonds worth say AMOUNT X (> 20 Lakhs)are redeemed and creditted automatically into your designated bank account ? How to account for a sudden increase in your say Savings Account ? Under what code does one mention this in the above Schedule ?

    Again the Schedules CYLA-BFLA and CFL with some concrete examples will be of real practical use !

    In conclusion,I must thank you in advance (yet to see any such site in the Finance and Taxation Field -only the techies are really “OPEN” and share knowledge)

    My apologies for a looonnggg message and Best Regards

  8. Sundar S says:

    How does one go about obtaining this ? Most banks don’t even bother stamping their TAN and PAN properly!

  9. Anonymous says:

    Hi Sundar,

    I am sorry for the late reply – I was busy with the redesign of the site, and you had a lot of questions. So, it took time :-)

    Thanks a lot for all the praise… I really appreciate it. Over the years, I have acquired some knowledge about stuff related to personal finance. This is my effort to help and give back…

    I use open-source software for this website. I agree that techies are really open in sharing their projects, sharing their knowledge and in helping others! Maybe I learnt this from them ;-)

    Ok, coming to your queries.

    LTCG on sale of shares subjected to STT: This needs to be mentioned in Schedule EI only.

    Section D in schedule CG: I don’t have much experience with the online filing of returns. So, I’m sorry, I wouldn’t be able to help you out here.

    Schedule EI – Interest earned on PPF: Please include this in (1) Interest income

    Schedule AIR – AIR codes:

    Code 005 – Yes, it includes shares bought in the secondary market as well, and not just in an IPO.

    Bonds worth > 20 Lakhs are redeemed and credited automatically into bank account – Under what code does one mention this in the above Schedule: This should be under code 001, as this is a “cash deposit aggregating Rs. 10 Lakhs or more”.

    Schedules CYLA-BFLA and CFL:

    These are the schedules related to set off of losses. This is a 3 stage process, and each schedule covers one step.

    The first step (Schedule CYLA) is to set off current year losses with current year income. Here, your current year income is reduced by your current year losses wherever allowed.

    The second step (Schedule BFLA) is to set off carried forward losses (losses from previous years) with current year income. Again, your current year income is reduced by your carried forward losses wherever allowed.

    The last step (Schedule CFL) is to arrive at losses that would need to be carried forward to subsequent years. Whatever losses (either from the current year or the losses carried forward from previous years) that can not be set off against income of the current year can be carried forward.

    Since this can have many permutations and combinations, it would not be possible for me to have an illustration. But I hope the above explanation helps you understand these better.

    Unique Transaction Number (UTN):

    I understand your concern! Although it has good logic behind it, a UTN is quite impractical considering the current systems in place.

    But don’t worry. Quoting of UTN is NOT MANDATORY for returns filed for FY 2008-09 (AY 2009-10). The Central Board of Direct Taxes (CBDT) has clarified this via notification No. 31 of 2009 dated 25 March 2009.

    So, you can file your returns without any worry!

  10. Hi,

    On Sunil’s question, one comment I would like to add

    “long term capital gains from debt MF” is taxable – flat 10% or 20% after indexation. This is the case for FMPs atleast.

    Now, can we set off Long term capital loss (shares / Eq. MFs)
    against the capital gains from Debt MFs ?.

    Thanks,
    Anand.

  11. Sundar S says:

    Dear Sir,
    I thank you for answering my questions.I am emboldened
    to trouble you again for the foll:-

    In the place where the long term and Short term taxes are to be
    given quarterly basis ie 15/9 ,15/12,15/03 etc :-
    1) does one include LTCG and STCG subjected to STT
    (ie shares related) ?
    2) Does one put negative numbers (say if one fills manually) ?
    3) Take the scenario I mentioned ie
    15/9 -a loss of 30000 (-30000)
    18/12 -a net gain of 60000 (ie actual gain of 90000)
    ..31/03 – a NET LOSS occurs.

    How EXACTLY does one enter these details ?(I can tell u the
    online form wants nothing to do with negative numbers -I am
    thinking manual now)

    Re: Schedule AIR :- For code 005 -does one add up the
    total value of all shares purchased from BSE/NSE
    in the Financial Year and put the TOTAL ?

    For Code 001 -suppose a Tax Free Bond got matured and
    automatically credited to your Savings Acct -does one
    put this under Code 001 ?

    I MUST THANK YOU in ADVANCE for your PATIENCE and will
    certainly let my friends know re: ur site.I am yet to go
    thru other areas of ur site but will do so soon…(as soon as
    I get this TAX thing off my head).regards and thanks.

  12. Sunil Khandelwal says:

    Can I set off long term Capital gains from Equity MF against long term capital gains from debt MF in same FY year.

    Can it be done for Short term gains/losses also.

    Regards,
    Sunil

  13. Can I set off long term Capital losses from Equity MF against long term capital gains from debt MF in same FY year.

    Can it be done for Short term gains/losses also.

    Regards,
    Sunil

  14. Anonymous says:

    Hi Sundar,

    Not a problem – I am glad I am able to help.

    Capital Gain: The date wise CG needs to include all capital gains. Yes, you shoud put negative numbers as well. But please remember to put the gross amounts for each period. (So, it would be -30000 and 90000 in your case)

    AIR Code 005: Yes, please put the total amount.

    AIR Code 001: This is for cash deposits only. So, you do not need to worry about this situation! (Sorry, I missed that earlier)

  15. Anonymous says:

    Hi Sunil,

    Looks like there is a mistake in your question – there is no question of setting of a gain against another gain.

    Can you please rephrase your question?

  16. Anonymous says:

    Hi Anand,

    Good question – it would help many people understand this better.

    The tax provisions say that if a gain from something is not taxed, a loss from that can not be used to set off another gain.

    So, since gain from equities / equity MFs is not taxed, loss from them can’t be used to set off any other gain.

    So, to answer your question, long term capital loss (shares / Eq. MFs) can not be set off against the capital gains from Debt MFs.

    LT capital loss from debt MFs can be set off against LT capital gain from debt MFs.

  17. Anonymous says:

    Hi Sunil,

    Long term capital losses can not be set off against any other gain. (Since long term capital gain is not taxed, long term capital loss can’t be set off against anything).

  18. Thanks for the clarification.

    1. I do have ST loss from Shares.
    Can I use this loss to offset against LT gains from
    “Debt” MF ?.

    (as both ST gains from Shares and LT gains from Debt MFs
    are taxable, I think I can do this).

    Please confirm.

    2. Should I mention my LT capital loss from Shares
    in ITR2 ?. Can I carry forward those losses for next year ?.

    (it may help if Govmt chooses to tax LT gains from
    shares sometime in next 7-8 years).

    If yes, where I should mention it ?

    In Schedule CG, under LT Capital gains
    there are two cases – Sec 112 exercised / Sec 112 not exercised.

    Which one is applicable for LT loss from shares ?.

    Thanks,
    Anand

  19. Hi Raag,

    You have mentioned that we have to file a loss return if we need to carry forward the losses. Whether there is any separate form that we have to submit inorder to file a loss return?

    Appreciate your help.

    Thanks
    Regards
    Suresh R

  20. Hi Raag,

    I have a loss of Rs.30000 by selling shares. Where do we need to mention this loss in the CG schedule of ITR2 form. Do we need to mention any additional information along with this loss amount ?

    Thanks,
    Regards
    Suresh

  21. Hi

    You have said “Long term capital losses can not be set off against any other gain. (Since long term capital gain is not taxed, long term capital loss can’t be set off against anything). ”

    Then I belive it’s prudent to sell it few days before 12 months (to make them short term losses) and then one will be able to adjust against long term gain in debt funds.

    What’s wrong in it (yes one would have to bear STT and may be exit loss in MF) but still if losses are significant it makes sense.

    Regards,
    Sunil

  22. I have following income from other sources:
    a) Bank interest – 4000 Rs
    b) STCG (equity sale, STT paid) – 7500 Rs

    The TDS on salary is more than 90% of the total tax liability (including tax on income from other sources). I have not paid any advance tax in 2008-09 FY. Do I need to pay interest under section 234 B?

  23. Anonymous says:

    Hi Suresh,

    There is no separate loss return – it needs to me mentioned in ITR2 only.

    Please mention it in schedules CG (A)(2), CYLA and CFL.

  24. Anonymous says:

    Hi Sunil,

    I agree, this is a viable from taxation point of view.

    I believe you would buy the same shares back, right? This might mean that when you sell them, you might have to pay short term capital gains tax (on a sale that would otherwise have been a long term capital gain).

    I personally do not recommend selling long term investments for any non-investment concerns.

  25. Anonymous says:

    Hi Anish,

    You would not need to pay interest u/s 234B.

  26. Anonymous says:

    Hi Anand,

    1. Yes.

    2. You can not carry forward LT capital loss from shares.

    Sec 112 (1) is applicable when income other than LT capital gains is less than the minimum taxable income.

  27. Dhana Prakash says:

    Hi Raagav,

    Can you please clarify whether we have to a file seperate return or combined return for my Spouse salary. She is working as a teacher with Rs.66,000 annual income.

    If we can file seperate return, under which conditions, we have to combine the income and enter at Schedule SPI?

    Can you please clarify? May be another article from you on this subject would benefit many like me.

    Regards,
    Dhana Prakash

  28. Anonymous says:

    Hi Dhana,

    Since your wife is working and earning her own income, it would not be clubbed with your income. Her income would be taxed separately.

    Only if you gift an amount to her, the income generated from such an amount would be clubbed with your income.

    Since her income (Rs. 66,000) is below the taxable threshold, there would be no tax on it and therefore, she doesn’t need to file an income tax return.

    This is a good idea for an article – I would try to write about it soon. Thanks for the suggestion!

  29. Niraj Agrawal says:

    Hello Raag,

    I have short term losses from shares in last four years of around 5 lakhs.

    Year 2006 – 2 lakhs (Approx)
    Year 2007- 1 Lakhs(Approx)
    Year 2008- 1 Lakhs(Approx)
    Year 2009- 1 Lakhs(Approx)

    In the financial year 1 April 2008- March 2009 my income from salary is 7 lakhs.

    My questions

    1). Can I set off the short term losses from shares with
    my salary income.
    2). If not, then how and from what source can i adjust these losses and what income can i set off this short term loss.
    3). Can i set off my earlier losses from shares
    4).For carry forward losses and set off short term losses,which form should i take to file returns.
    5) I have some income from commission as well, which is earned by selling insurance policies and for this i have got form 16 from the company which has deducted TDS for the income, could you please tell me if i can add this income with my salary income and which form to be used for this income & how would i give details of TAN no when there are only two sections of that, both of which i am already using and there is no space for third.

    Please advise.

    Thanks
    Niraj Agrawal

  30. Dhana Prakash says:

    Hi Raagav,

    Thanks a lot for your clarifications.

    Regards,
    Dhana Prakash

  31. Hi,
    There is a wealth of information here. Thanks for maintaining it.

    I have (1) LT capital gain from equity and (2) ST capital loss from equity (3) LT capital loss from debt (4) ST capital loss from debt.

    Overall I have more of (1) than all loss combined. That means ST loss, LT gain and overall positive capital gain.

    Now to questions:
    a) can I set off (3) with (1)
    b) do I have an option to carry forward all of the losses or at least the ST losses since (1) is tax free. ITR2 (excel) does not seem to allow to carry forward ST losses if it can be set off against LT gains.
    c) how much do I consider as exempt income? all of (1)?

  32. John Desouza says:

    Hi, I have a Salary Account with a bank and over the 15 years it has accumulated over 8 lakh rupees. Bank paid around 20000 rs interest on this SAVINGS account, but they have not deducted any TDS for the same. Question is do I need to pay INCOME TAX for this amount. If so, under what section and where do I have to write this amount while filing the ITR-1 form. Note that I am a Salaried Employee with no other income (including Caoital gains) and my TDS is deducted directly by my employer.

  33. Anonymous says:

    Hi Vathsa,

    It should be:
    2006-07 : 50,000 and 2007-08: Nil

  34. Anonymous says:

    Hi Abhijit,

    a) No

    b) you should be able to carry forward ST capital loss from equity, LT capital loss from debt and ST capital loss from debt.

    c) Yes.

  35. Anonymous says:

    Hi John,

    Yes, you need to mention this in the ITR.

    The income would fall under the head “Other Income”.

  36. Anonymous says:

    Hi Sireesh,

    ITR2 can also be filed by salaried people. Please go ahead with filing ITR2.

  37. Hi,

    I have some short term capital losses and I want to carry them forward to next year. I am a salaried professional and my tax is deducted by my employer.

    The ITR2 states its for non salaried persons only. Please inform if i have to fill ITR1 or IRT 2

    Thanks,
    Sireesh

  38. Any example for enterign the carry forward loss will be helpful. Lets take the example, all these for short term capital gains.

    Fin year: 2006-07 Loss: 1 Lakh Carried forward ( 1 Lakh)
    Fin year: 2007-08 Gain: 50,000 Effective Carried forward (50,000)

    Now while filing the ITR2 for Fin year: 2008-09, what should we enter in schedule CFL.

    Loss carried:
    2006-07 : 50,000 and 2007-08: Nil
    or
    2006-07: Nil and 2007-08: 50000 ?

  39. sir ,
    can i set off my bussiness lost Next year.?
    means i have a loss of fifty thousand in FY 2008-09 and if i expect profit of 3 lakh next year then i compensate it in FY 2009-10 from previous year business loss in itr-4?

  40. Anonymous says:

    Hi Sumit,

    I am sorry, I do not have enough knowledge about business income / loss to guide you about this.

  41. I have a gain of 11873(In Delivery) from share market and a loss of 15460(In interaday).So i have a total loss of aroud 4000.
    Do i need to show this loss while filing my IT.
    I am a salaried person and the company itself will give me my Form 16.
    Do i need to attach any other form for showing this small loss.

    Please clarify.

  42. I had bought one flat in Apr’05. I got the possession of the same in Apr’06. I claimed Pre EMI interest for 3 years. Now I have sold my flat in Jul’09. Can I still get deduction for two remaining Pre EMI Interest installments? If yes, under which head? I have only Salaried income. Can I set off Per EMI interest income against my salaried income?

  43. shailesh bhansali says:

    i had file itr for a y 2000-01 claiming @ 6 lac business loss in time. for a y 2001-02 claiming @ 8 lac business loss in time. in a y 2002-03, 03-04, 04-05,05-06, 06-07, i filed salary income return in march 03, 04,05,06,07 respectively. in a y 2007-08 i make business income of @ 14 lac now i t o refusing to give me sett off against loss of a y 2000-01 & 2001-02 with reason that i have to fileed all return before due date. is it correct ? if yes ok. if no , can you give me the act?

  44. prashant shrivastava says:

    i must congratulate you on such concise and clear information on taxation planning.
    I did not claim benefit of pre emi of my house loan on the first year after possesion. Can i claim it latter or can i claim it in the sixth year after possesion.

  45. Anonymous says:

    Congratulations on bringing up this wonderful site. This is the most useful site I have seen in this area of personal finance.

    I have a doubt on the sale of my current flat. I bought it in FY 2006-07 for an amount of 23 lac and is selling it for 32 lac. When bought I had spent around 3 lac for interiors and some extra work by the builder. Thus the cost of aquisition when calculated with indexing turns out to be around 35.5 lac (indexing factor to be 1.37). Wanted to check with you that in this case, would I be able to file a loss of 3.5 lac which can be set-off against my current year’s salary income ?

    If yes, what all information should I provide while filing my returns ? Don’t know whether it matters, but I would be buying a new flat this FY itself. Please give your valuable advise.

  46. Anonymous says:

    Hello ,

    Can I claim HRA exemption as well as Loss of income from a property that I have let out in the same city.

    thanks
    Deepa

  47. shireesha says:

    Hi,

    Firstly this is an excellent article on a very confusing issue.
    I have a doubt though on a return filed

    Loss from house property (loan interest)= 70000 was clubbed with
    Loss from shares (short term capital loss) = 12000

    and the whole 82000 was deducted from my salary+ interest income.

    Is this correct ?
    Thanks
    Shireesha

  48. Thanks for bringing such a informative site.

    I am a salaried professional, I had bought a House at 14 Lacks Registered value and took a loan of 18.5 lacks for it including 14 Lacks + fitting and furinishing charges around 6 lacks from bank, i took another 3.5 lacks of loan for renovation in 2009 for the same property and I sold the house for 21 Lacks this year which calculates to Long Term Capital Loss (since its more than 3 yrs old) , Now i have certain confusions:-
    a) Is the purchase value accounted with the loan amount 18.5 lacks or registry amount of 14 lacks.
    b) I have no other income this year against any head except Taxable income of around 8 Lacks (after HRA). Can i set off this loss from my Taxable Income of 8 Lacks. How much can i off set as the loss is more than my taxable income this year.
    c) If i can off set it in this year then please state under which section of Form 16 it should be mentioned.

    Thanks in advance for your kind concern.

    Regards,
    Gaurav

  49. rucha sharma says:

    Hello sir,
    I have principal outstanding of housing loan of 19 lacs, its Interest component will be around 2.5 lacs for which i can claimed 1.5 lacs as tax benefits.I already taken possession of house in dec2009.
    My question is :
    if i prepay entire loan amount this financial year(say before mar2012)
    1) can i still claim (2.5-1.5) 1lac carry forward loss due to interest in tax benefit in the next financial year .
    2)If not , going by pre-emi logic, can i claim 20% of 1 lac in next financial year,even though my housing loan from bank has been closed.

    Please advise.
    regards
    Rucha

  50. Whether short term capital loss on sale of shares on off market transactions (without paying STT) be adjusted against short term capital gains on shares sold thru NSE (STT Paid) in the same year and whether such unabsorbed losses can be carried forward to future assessment years to set off against any type of short term capital loss.

  51. Hallo Sir,
    I want to know about Tax saving in term of ULIP loasses. Can i take the benefit to carry forward the loss of ULIP deposits.

    Kindly advice.
    thanks & Regards
    Manoj

  52. Vijayalakshmi says:

    Hi Sir,

    Very nice site and all details are in elaborate. Thanks for helping us.

    I was in abroad from Feb 2005 to Nov 2009. I did not file income tax for 2005 apr to 2006 Mar similarly 2006 – 2007, 2007 – 2008, 2008 – 2009. I filed tax for 2009 – 2010 but since the income is very low and i did not get any tax.
    This year I am paying huge tax. My housing loan interest is only 75000 and can I use 75000 from one of the previous years also to get the limit of 1.5 lakh and file the return. In that case if I have the rent to be adjustted which is around 4000 per month after taking property taxes and 30% std ded in to consideration it comes to 48000 net annual rental value. Can I also adjust this 48000 from previous interest and carry forward rest of the losses to next year.

    2005 Apr to 2006 Mar – say 75000
    Nil rent as parents were staying

    2006 Apr to 2007 Mar – say 75000
    Nil rent as parents were staying

    2007 Apr to 2008 Mar – say 75000
    Nil rent as parents were staying

    2008 Apr to 2009 Mar – say 75000.

    Rent annual value 48000 after deduction of property tax and 30% rental value
    Loss from house property = 27000

    Curent year 2009 Apr to 2010 Mar – can I claim

    Interest paid = 75000
    Rent annual value 48000 after deduction of property tax and 30% rental value
    Loss from house propery = 27000

    Carry forward losses from 2009 Mar – 27000
    Carry forward losses from 2008 Mar – 75000
    Carry forward losses from 2007 Mar – 75000 (Only 21000 will be utilised this year. Remaining 54000 can be used next year)
    Carry forward losses from 2006 Mar – 75000 ( can be used next year)

    So this year 2009 apr to 2010 mar my income from house propery = -150000

    can I do this way?
    Please clarify. It is complicated but wanted to explain in detail.
    Thanks Again for the wonderful details in this site.

    Regards
    Viji

  53. what happens if we have both long term and short term loss to be carried forward? do we segregate the two and set it off against future long term gain while the short term loss is acrried fwd further?

  54. A.JAYA KUMAR says:

    MYSELF AND MY WIFE HAVE AVAILED HOMELOAN FOR WHICH WE ARE PAYING RS.3,20,000 INTEREST. THE HOUSE IS IN BOTH OF OUR NAME.CAN WE BOTH AVAIL I.T. EXEMPTION OF RS.1,50,000 EACH SEPERATELY?

  55. Dr. Ashok Mehta says:

    My father expired in 1958 and my mother and we four brothers and two sisters were succeedors of property ( Two Residential houses.) of our great grand father. Although I had my child age spend in those houses, I was in possession of about one sixth part of the property since 1983, when I shifted in KOTA Rajasthan from Gujrat again. My mother also expired in 2008. Now that property was sold this F.Y. (2011-12) in Rs. 2500000 – Twenty Five Lacks. I received my 1/6 th portion of of it, i.e., Rs. 417500. Cost of aquision in not known as it was property of our great grand father. Market value of 1983 is also not known. How to know old market value of that property of KOTA Rajasthan and calculate the Capital Gain or Loss what so ever.

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