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GlossaryDTWhat is Set Off of Losses?
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What is Set Off of Losses?

Set-off of losses is the adjustment of a loss under one head of income against income, first within the same head and then across heads, with the balance carried forward.

Bare Law Reference: Sections 70-74, Income-tax Act.

Detailed Explanation

How it works

Intra-head set-off comes first (Section 70), then inter-head (Section 71); unabsorbed losses carry forward for periods that vary by loss type, mostly requiring a timely return.

Frequently asked questions

How are losses set off?

First within the same head, then against other heads, and any balance is carried forward subject to limits.

Do I need to file on time to carry forward losses?

Yes for most losses (business, capital); house property loss and unabsorbed depreciation are exceptions.

This content is for general guidance only and does not constitute professional advice. Tax law changes frequently — verify the current position and consult a qualified Chartered Accountant before acting. Last reviewed: June 2026.

Key Takeaways

  • Set off intra-head, then inter-head, then carry forward.
  • Capital losses only against capital gains.
  • Timely return needed for most carry-forwards.
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