SET OFF AND CARRY FORWARD OF LOSSES AND DEDUCTIONS

FROM GROSS TOTAL INCOME

 SET OFF AND CARRY FORWARD OF LOSSES
• Set off losses means adjusting losses against the profit/income of the particular
year.
• Losses that are not set off against the income in the same year, can be carried
forward for the subsequent years for the set off against income of those years.
• A set off could be –
1. Intra-head set off
2.Inter-head set off
 INTRA-HEAD SET OFF

• The losses from one sources of income can be set off against income from
another sources under the same head of income.
• For ex: loss of Business ‘A’ can be set off against profit from Business ‘B’ where
Business ‘A’ is one source and Business ‘B’ is another source and the common
head of income is “Business”.
 EXCEPTIONS TO INTRA-HEAD SET OFF
1. Losses from the speculative business will only be set off against the
profit of speculative business. One cannot adjust the losses of
speculative business with the income from any other business or
profession.
2. Loss from any activity of owning and maintaining race-horse will be
set off only against the profit from the activity of owning and
maintaining race-horse.
3. Long term capital loss will only be adjusted towards long term capital
gains. Interestingly, a short term capital loss can be set off against
long term capital gain or short term capital gain.
4. Losses from a specified business will be set off only against profit of
specified business. But the losses from any other business or profession can
be set off against profits from the specified business.
 INTER-HEAD SET OFF

• After intra-head adjustments, the tax payers can set off remaining losses
against income from another heads.
• Ex: Loss from house property can be set off against income from salary.
 INTER-HEAD SET OFF OF LOSSES

1. Loss from house property can be set off against income under any head.
2. Business loss other than speculative business can be set off against any
head of income except income from salary.
 LOSSES CANNOT BE SET OFF AGAINST ANY OTHER HEAD OF
INCOME

1. Speculative business loss

2. Specified business loss
3. Capital losses
4. Losses from activity of owning and maintaining race-horses
 CARRY FORWARD OF LOSSES

• After making appropriate and permissible intra-head and inter-head

adjustments, there could be still unadjusted losses. These unadjusted losses
can be carried forward to future years for adjustment against income of these
years.
 RULES TO CARRY FORWARD FOR DIFFERENT HEADS OF
INCOME

• Losses from House Property

1. can be carried forward up to next 8 assessment years from the
assessment year in which the loss was incurred.
2. can be adjusted only against income from house property
3. can be carried forward even if the return of income from the loss year is
belatedly filed.
 RULES TO CARRY FORWARD FOR DIFFERENT HEADS OF
INCOME

• Losses from non Speculative Business (regular business) loss

1. can be carried forward up to next 8 assessment years from the
assessment year in which the loss was incurred.
2. can be adjusted only against income from business or profession.
3. not necessary to continue the business at the time of set off in future
years.
4. cannot be carried forward if the return is not filed within the original due
date.
 RULES TO CARRY FORWARD FOR DIFFERENT HEADS OF
INCOME

• Speculative Business loss

1. can be carried forward up to next 4 assessment years from the assessment
year in which the loss was incurred.
2. can be adjusted only against income from speculative business.
3. cannot be carried forward if the return is not filed within the original due
date.
4. not necessary to continue the business at the time of set off in future years.
 RULES TO CARRY FORWARD FOR DIFFERENT HEADS OF
INCOME

• Specified Business loss under section 35 AD

1. no time limit to carry forward losses from the Specified Business loss under
section 35 AD.
2. not necessary to continue the business at the time of set off in future years.
3. cannot be carried forward if the return is not filed within the original due
date.
4. can be adjusted only against income from Specified business under section
35 AD.
 RULES TO CARRY FORWARD FOR DIFFERENT HEADS OF
INCOME

• Capital losses
1. can be carried forward up to next 8 assessment years from the
assessment year in which the loss was incurred.
2. long term capital losses can be adjusted only against long term capital gains.
3. short term capital losses can be set off against long term capital gains and
short term capital gains.
4. cannot be carried forward if the return is not filed within the original due
date.
 RULES TO CARRY FORWARD FOR DIFFERENT HEADS OF
INCOME

• Losses from owning and maintaining horse race

1. can be carried forward up to next 4 assessment years from the assessment
year in which the loss was incurred.
2. cannot be carried forward if the return is not filed within the original due
date.
3. can only be set off against income from owning and maintaining horse
races only.
 POINTS TO NOTE

• A taxpayer incurring a loss from a source, income from which is otherwise

exempt from tax, cannot set off these losses against profit from any taxable
source of Income.
• Losses cannot be set off against casual income i.e. crossword puzzles, winning
from lotteries, races, card games, betting etc. 
 DEDUCTIONS

• Deductions are the exemptions on the amount taxable as per Income Tax Act.
They are the Investments made by the persons for them, their Family & their
parents.
• Income Tax Deduction Available to Individual and HUF under Section 80C to
Section 80U of Income Tax Act, 1961.
 Sections Income Tax Deduction for FY Who can Invest? Maximum deduction available for
2022-23(AY 2023-24) FY 2022-23 (AY 2023-24)

80 C Investing into very common and popular investment Individual Up to Rs 1,50,000

options like LIC, PPF, Sukanya Samriddhi Account, Or
Mutual Funds, FD, child tuition fee, ULIP, etc. HUF

80 CC Investment in Pension Funds Individual

80 CCD (1) Atal Pension Yojana and National Pension Scheme Individual
Contribution

80 CCD (1 B) Atal Pension Yojana and National Pension Scheme Individual Up to Rs 50,000
Contribution (additional deduction)

80 CCD (2) National Pension Scheme Contribution by Employer Individual Amount Contributed
or 14% of Basic Salary + Dearness
Allowance (in case the employer is
Government)
10% of Basic Salary+ Dearness
Allowance(in case of any other
employer)- Whichever is lower
 Sections Income Tax Deduction for FY Who can Invest? Maximum deduction available for
2022-23(AY 2023-24) FY 2022-23 (AY 2023-24)
80 D Medical Insurance Premium, preventive health Individual Up to Rs 1,00,000
checkup and Medical Expenditure Or HUF
80 DD Medical Treatment of a Dependent with Disability Individual Normal Disability (atleast 40% or
Or HUF more but less than 80%): Rs
75000/-
Severe Disability (atleast 80% or
more) : Rs 125000/-
80 DDB Medical expenditure for treatment of Specified Individual Senior Citizens: Upto Rs 1,00,000
Diseases Or HUF Others: Upto Rs 40,000

80 E Interest paid on Loan taken for Higher Education Individual No limit (Any amount of interest
paid on education loan)upto 8
assessment years
80 EE Interest paid on Housing Loan Individual Upto Rs 50,000 subject to some
conditions
80 EEA Interest Paid on Housing Loan Individual Upto Rs 1,50,000/- subject to
some conditions
80 EEB Interest paid on Electric Vehicle Loan Individual Upto Rs 1,50,000 subject to some
conditions
 Sections Income Tax Deduction for FY Who can Invest? Maximum deduction available for
2022-23(AY 2023-24) FY 2022-23 (AY 2023-24)

80 G Donation to specified funds/institutions. All Assessee (Individual, HUF, 100% or 50% of the Donated
Company, etc) amount or Qualifying limit,
Allowed donation in cash up to
Rs.2000/-

80 GG Income Tax Deduction for House Rent Individual Rs. 5000 per month
Paid 25% of Adjusted Total Income
Rent paid - 10% of Adjusted Total
Income- whichever is lower

80 GGA Donation to Scientific Research & Rural All assessee except those who 100% of the amount donated.
Development have an income (or loss) from Allowed donation in cash up to
a business and/or a profession Rs.10,000/-

80 GGB Contribution to Political Parties Companies 100% of the amount contributed

No deduction available for the
contribution made in cash

80 GGC Individuals on contribution to Political Individual 100% of the amount contributed.

Parties HUF No deduction available for the
AOP contribution made in cash
BOI
Firm
Sections Income Tax Deduction for FY Who can Invest? Maximum deduction available
2022-23(AY 2023-24) for FY 2022-23 (AY 2023-24)

80 RRB Royalty on Patents Individuals (Indian citizen or foreign Rs.3,00,000/- Or Specified

citizen being resident in India) Income - whichever is lower

80 QQB Royalty Income of Authors Individuals (Indian citizen or foreign Rs.3,00,000/-

citizen being resident in India) Or
Specified Income
- whichever is lower

80 TTA Interest earned on Savings Accounts Individual Or HUF (except senior citizen) Up to Rs 10,000/-

80 TTB Interest Income earned on Individual (60 yrs or above) Upto Rs 50,000/-
deposits(Savings/ FDs)

80 U Disabled Individuals Individuals Normal Disability: Rs. 75,000/-

Severe Disability: Rs. 1,25,000/-
 80G- DONATION TO CERTAIN FUNDS, CHARITABLE
INSTITUTIONS ETC.
Assessee: All types of Assessee’s

Classification of Donations:
1. No limit donations- whole amount qualifies for deduction.
2. With limit donations- Qualifying amount shall not exceed 10% of GTI after
making certain deductions.
 80G- DONATION TO CERTAIN FUNDS, CHARITABLE
INSTITUTIONS ETC.

NO LIMIT WITH LIMIT

DEDUCTION DEDUCTION

Deduction=100% Deduction =50% Deduction =100% Deduction =50% of

of Donation of Donation of Donation(subject Donation(subject to
to qualifying limit) qualifying limit)
 80G- DONATION TO CERTAIN FUNDS, CHARITABLE
INSTITUTIONS ETC.

• Qualifying limit shall not exceed 10% of adjusted gross total income

Particulars Amount
Gross total income XXX
Less: STCG u/s 111A XXX
Less: LTCG XXX
Less: Deductions u/s 80C to 80U (except 80 G) XXX
Adjusted GTI XXX
Example:
• NO LIMIT DEDUCTION
Deduction=100% of Donation
If donation= Rs. 50,000
Deduction allowed = Rs. 50,000 (50,000 x 100%)
NO LIMIT DEDUCTION Total deduction
Deduction=50% of Donation allowed = Rs. 80,000
If donation= Rs. 60,000
Deduction allowed = Rs. 30,000 (60,000 x 50%)
 Particulars Amount

Gross total income 9,00,000

Less: STCG u/s 111A 25,000

Less: LTCG 75,000

Less: Deductions u/s 80C to 80U (except 80 G) 50,000

Adjusted GTI 7,50,000

Example:
• WITH LIMIT DEDUCTION
Deduction=100% of Donation (subject to qualifying limit)
If donation= Rs. 50,000
Deduction allowed = 100% of 50,000 0r 75,000 whichever is lower
= Rs. 50,000
• WITH LIMIT DEDUCTION
Deduction=50% of Donation (subject to qualifying limit)
If donation= Rs. 60,000 Total deduction
allowed = Rs.

Deduction allowed = 50 % of 60,000 0r 25,000 (75,000- 50,000) 62,500

whichever is lower 12500 (25,000 x 50%)
 Eligibility to claim deduction under Section 80G

The following taxpayer can claim a deduction under this section: 

• Individuals 
• Companies 
• Firms 
• Hindu Undivided Firm (HUF)
• Non-Resident Indian (NRI)
• Any other person
 MODE OF PAYMENT UNDER SECTION 80G

• Section 80G deductions can be claimed by taxpayers when they make

donations through the following modes:
• Cheque 
• Demand draft 
• Cash (for donations below Rs 2,000)

Note: In-kind contributions such as food, material, clothes, medicines etc., and
donations of above Rs 2,000 in case they do not qualify for deduction under
Section 80G. Donations above Rs 2,000 should be made in any mode other than
cash to qualify under Section 80G.
 CLAIM THE DEDUCTION UNDER SECTION 80G

• To be able to claim this deduction, the following details have to be submitted

in your income tax return:
• Name of the donee
• PAN of the donee
• Address of the donee
• Amount of contribution – the breakup of contribution in cash and another
mode
• The amount eligible for deduction
The above details need to be mentioned in the respective tables given in the
ITR.

• Table A: For donations entitled to 100% deduction without qualifying limit

• Table B: For donations entitled to 50% deduction without qualifying limit

• Table C: For donations entitled to 100% deduction subject to qualifying limit

• Table D: For donations entitled to a 50% deduction subject to the qualifying

limit
 LIST OF DONATIONS ELIGIBLE FOR 100% DEDUCTION
WITHOUT QUALIFYING LIMIT

1. National Defence Fund set up by the Central Government

2. Prime Minister’s National Relief Fund
3. National Foundation for Communal Harmony
4. An approved university/educational institution of National eminence
5. Zila Saksharta Samiti constituted in any district under the chairmanship of
the Collector of that district
6. Fund set up by a state government for medical relief to the poor
7. National Illness Assistance Fund
8. National Blood Transfusion Council or any State Blood Transfusion Council
 LIST OF DONATIONS ELIGIBLE FOR 100% DEDUCTION WITHOUT QUALIFYING LIMIT

9. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation, and Multiple Disabilities.
10. National Sports Fund
11. National Cultural Fund
12. Fund for Technology Development and Application
13. National Children’s Fund
14. Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any
State or Union Territory
15. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force
Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
16. The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6,
1993
17. Chief Minister’s Earthquake Relief Fund, Maharashtra
18. Any fund set up by the State Government of Gujarat exclusively for
providing relief to the victims of the earthquake in Gujarat
19. Any trust, institution or fund to which Section 80G(5C) applies for
providing relief to the victims of the earthquake in Gujarat (contribution
made between January 26, 2001, and September 30, 2001)
20. Prime Minister’s Armenia Earthquake Relief Fund
21. Africa (Public Contributions – India) Fund
22. Swachh Bharat Kosh (applicable from FY 2014-15)
23. Clean Ganga Fund (applicable from FY 2014-15)
24. National Fund for Control of Drug Abuse (applicable from FY 2015-16)
 LIST OF DONATIONS ELIGIBLE FOR 50% DEDUCTION WITHOUT QUALIFYING LIMIT

1. Prime Minister’s Drought Relief Fund

2. Jawaharlal Nehru Memorial Fund
3. Indira Gandhi Memorial Trust
4. Rajiv Gandhi Foundation
Note: Donations to the last three funds will not be eligible for deduction from
FY 2023-24 onwards
LIST OF DONATIONS ELIGIBLE FOR 100% DEDUCTION SUBJECT
TO 10% OF ADJUSTED GROSS TOTAL INCOME

1. Donations to the government or any approved local authority, institution or

association to be utilized to promote family planning
2. Donation by a company to the Indian Olympic Association or any other
notified association or institution established in India to develop
infrastructure for sports and games in India or sponsor sports and games in
India.
 LIST OF DONATIONS ELIGIBLE FOR 50% DEDUCTION SUBJECT
TO 10% OF ADJUSTED GROSS TOTAL INCOME

1. Any other fund or institution satisfies the conditions mentioned in Section

80G(5).
2. Government or any local authority, to be utilized for any charitable purpose
other than promoting family planning.
3. Any authority constituted in India to deal with and satisfy the need for housing
accommodation or the purpose of planning, development or improvement of
cities, towns, villages or both.
4. Any corporation referred to in Section 10(26BB) for promoting the interest of
the minority community.
5. For repairs or renovation of any notified temple, mosque, gurudwara, church, or
other places.
80 G