Ten Set off and carry forward under income tax Act, 1961 of Tax Planning and Management

Ten Set off and carry forward under income tax act, 1961

Under the Income Tax Act, 1961, there are various provisions that allow taxpayers to set off and carry forward certain losses and expenses. Here are ten set off and carry forward provisions:

1. Set off of losses: Under Section 70 of the Income Tax Act, 1961, taxpayers can set off losses from one source of income against income from another source. For example, business losses can be set off against salary income.
2. Set off of depreciation: Under Section 32 of the Income Tax Act, 1961, taxpayers can set off the depreciation of an asset against income from any source.
3. Set off of capital gains: Under Section 74 of the Income Tax Act, 1961, taxpayers can set off short-term capital losses against short-term capital gains and long-term capital losses against long-term capital gains.
4. Set off of speculative losses: Under Section 73 of the Income Tax Act, 1961, taxpayers can set off speculative losses from business against any other business income.
5. Set off of business losses: Under Section 72 of the Income Tax Act, 1961, taxpayers can carry forward and set off business losses for up to eight years from the year in which the loss was incurred.
6. Set off of house property losses: Under Section 71 of the Income Tax Act, 1961, taxpayers can carry forward and set off house property losses for up to eight years from the year in which the loss was incurred.
7. Set off of loss on sale of shares: Under Section 70B of the Income Tax Act, 1961, taxpayers can set off loss on the sale of shares against any other capital gains.
8. Carry forward of capital losses: Under Section 74 of the Income Tax Act, 1961, taxpayers can carry forward capital losses for up to eight years from the year in which the loss was incurred.
9. Carry forward of business losses: Under Section 72 of the Income Tax Act, 1961, taxpayers can carry forward business losses for up to eight years from the year in which the loss was incurred.
10. Carry forward of house property losses: Under Section 71 of the Income Tax Act, 1961, taxpayers can carry forward house property losses for up to eight years from the year in which the loss was incurred.

Summary

Set off and Carry Forward Provisions	Explanation
Set off of losses	Taxpayers can set off losses from one source of income against income from another source.
Set off of depreciation	Taxpayers can set off the depreciation of an asset against income from any source.
Set off of capital gains	Taxpayers can set off short-term capital losses against short-term capital gains and long-term capital losses against long-term capital gains.
Set off of speculative losses	Taxpayers can set off speculative losses from business against any other business income.
Set off of business losses	Taxpayers can carry forward and set off business losses for up to eight years from the year in which the loss was incurred.
Set off of house property losses	Taxpayers can carry forward and set off house property losses for up to eight years from the year in which the loss was incurred.
Set off of loss on sale of shares	Taxpayers can set off loss on the sale of shares against any other capital gains.
Carry forward of capital losses	Taxpayers can carry forward capital losses for up to eight years from the year in which the loss was incurred.
Carry forward of business losses	Taxpayers can carry forward business losses for up to eight years from the year in which the loss was incurred.
Carry forward of house property losses	Taxpayers can carry forward house property losses for up to eight years from the year in which the loss was incurred.

Conclusion

In conclusion, the Income Tax Act, 1961 provides various provisions for taxpayers to set off and carry forward losses and expenses to reduce their tax liability. These provisions include set off of losses, depreciation, capital gains, speculative losses, business losses, house property losses, loss on sale of shares, and carry forward of capital losses, business losses, and house property losses. These provisions offer relief to taxpayers who may have incurred losses or expenses and allow them to reduce their tax liability in the future. It is important for taxpayers to understand these provisions and use them effectively to optimize their tax planning and reduce their tax burden.

Disclaimer

The content of Computer, Commerce, Reasoning, provided for the educational purpose. This is the study materials for the Commerce & other students. These books, Notes PDF, Article are authorized by own publications, we provide Article/PDF for educational purpose. Any copyright climb please mail to the ‘DeepakPathasala’ official email response as soon as possible.