Set off of loss from one head against income from another head (Inter-Head Adjustment) - Section 71 - Income Tax - Ready Reckoner - Income Tax

Set off of loss from one head against income from another head (Inter-Head Adjustment) - Section 71 It means loss under one head of income can be set off against income from another head of income but in the same previous year. Exceptions: - Speculative business loss can be set off against only speculative income Loss of 'Specified Business' under section 35AD can be set off against any other specified business income. Loss under the head Profits and gains of business or profession cannot be set off against the head income from Salaries [ Section 71(2A) ] Long term capital loss can be set off against long term capital gain whereas 'Short term capital loss can be set-off against LTCG/STCG thus, Such Capital loss not allowed to set off against any other head of income, It shall however be allowed to carried forward. [ Section 71(3) ] Loss from owning maintaining race horses can be set off against owning maintaining race horses income. Loss under the head income from house property allowed to set off from any other head upto ₹ 2,00,000 [ Section 71(3A) ] Loss incurred by an assessee from a source, income from which is exempt, cannot be set-off against income from a taxable source. Note: For carry forward losses inter-head adjustment is Not Allowed.