Section 71 - Set off of loss from one head against income from another - Income-tax Act, 1961

1 [Set off of loss from one head against income from another. 71. (1) Where in respect of any assessment year the net result of the computation under any head of income, other than Capital gains , is a loss and the assessee has no income under the head Capital gains , he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head. (2) Where in respect of any assessment year, the net result of the computation under any head of income, other than Capital gains , is a loss and the assessee has income assessable under the head Capital gains , such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head Capital gains (whether relating to short-term capital assets or any other capital assets). 2 [ (2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss and the assessee has income assessable under the head Salaries , the assessee shall not be entitled to have such loss set off against such income. ] (3) Where in respect of any assessment year, the net result of the computation under the head Capital gains is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head. ] 4 [ (3A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head Income from house property is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds two lakh rupees, against income under the other head. ] 3 [ (4) Where the net result of the computation under the head Income from house property is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) and thereafter the loss referred to in section 71A shall be set off in the relevant assessment year in accordance with the provisions of that section. ] -------------------------------- Notes :- 1. Substituted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to substitution, section 71 was amended by the Finance (No. 2) Act, 1962, w.e.f. 1-4-1962, Finance Act, 1987, w.e.f. 1-4-1988 and the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. 2. Inserted by the Finance (No. 2) Act, 2004, w.e.f. 1-4-2005. 3. Substituted by the Finance Act, 1994, w.e.f. 1-4-1995. Prior to substitution, sub-section (4), as inserted by the Finance Act, 1992, w.e.f. 1-4-1993, read as under : '(4) Notwithstanding anything contained in sub-sections (1) and (2), where in respect of any assessment year the net result of the computation, in relation to any property [other than the property referred to in sub-clause (i) of clause (a) of sub-section (2) of section 23], under the head Income from house property is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.' 4. Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2018