Section 108: set off of losses under same head of income

The general same-head set-off rule

Unless the Act provides otherwise, if the net result of computation from any source under any head of income (other than 'Capital gains') is a loss for a tax year, the assessee can set off that loss against income from any other source under the same head for that tax year.

Special rule for capital gains

Where the net result of computing income for a tax year under Sections 72 to 90 (the capital gains computation provisions) shows a loss on any short-term capital asset, that loss can be set off against income computed on any other capital asset for that year.

Where the net result shows a loss on any long-term capital asset, that loss can only be set off against income computed on any other long-term capital asset for that year - it cannot be set off against short-term capital gains.

Frequently asked questions