Set-off of losses means adjusting the losses against the profit or income of that particular year. Losses that are not set off against income in the same year can be carried forward to the subsequent years for set off against income of those years.

Carry forward of losses

Losses from House Property :

It Can be carried forward up to the next 8 assessment years from the assessment year in which the loss was incurred and Can be adjusted only against Income from house property

Losses from Non-Speculative Business (Regular Business) Loss

It Can be carried forward up to the next 8 assessment years from the assessment year in which the loss was incurred and Can be adjusted only against income from business or profession. It is not necessary to continue the business at the time of set off in future years.

Speculative Business Loss

It Can be carried forward up to the next 4 assessment years from the assessment year in which the loss was incurred and Can be adjusted only against income from speculative business. It Cannot be carried forward if the return is not filed within the original due date.

Specified Business Loss under 35AD

It Can be adjusted only against income from specified businesses under 35AD. There is No time limit to carry forward the losses from the specified business under 35AD. It Cannot be carried forward if the return is not filed within the original due date.

Capital Losses

It Can be carried forward up to the next 8 assessment years from the assessment year in which the loss was incurred. Long-term capital losses can be adjusted only against long-term capital gains. Short-term capital losses can be set off against long-term capital gains as well as short-term capital gains.

Losses from owning and maintaining race-horses

It Can be carried forward up to the next 4 assessment years from the assessment year in which the loss was incurred and Can only be set off against income from owning and maintaining race-horses only.