What is meant by a carry forward of losses?
Losses incurred in a financial year can be:
- Set-off against profits/ income earned during the year.
- Carried Forward to be claimed against profits/income earned in the subsequent years.
If the losses incurred in a year could not be set-off under the same/ different income head(s) for the same year, they are allowed to be Carried Forward. It is claimed as a set-off from profits/ income earned in subsequent years.
Type of loss to be carried forward | Type of income losses can be set-off against | No. of years losses can be carried forward | Mandatory to file ITR by due date |
| Loss from House Property | Income from House Property | 8 Years | No |
| Loss from Normal Business | Income from Business | 8 Years | Yes |
| Loss from Speculative Business | Income from Speculative Business | 4 Years | Yes |
| Short Term Capital Loss (STCL) | Short Term Capital Gain (STCG) and Long Term Capital Gain (LTCG) | 8 Years | Yes |
| Long Term Capital Loss (LTCL) | Long Term Capital Gain (LTCG) | 8 Years | Yes |
Always keep track of your losses. As per the Income Tax rules, you will have to file your Income Tax Return (ITR) by its due date if you want to carry forward losses from a year. If you forget to file an ITR reporting a loss, the loss of income cannot be carried forward.
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