Section 109: set off of losses under any other head of income

The general cross-head set-off rule

Subject to the rest of this Chapter, if income computed under any head of income (other than 'Capital gains') is a loss for a tax year, that loss can be set off against the assessee's income under any other head, including 'Capital gains', assessable for that tax year - subject to the conditions below.

Two conditions on cross-head set-off

• A loss under "Profits and gains of business or profession" cannot be set off against income assessable under the head "Salaries"
• A loss under "Income from house property" can be set off against income under any other head only up to ₹2,00,000

Capital gains losses cannot be set off against other heads

For any tax year, a loss under the head 'Capital gains' cannot be set off against income under any other head - it stays confined to being set off against capital gains income only (as governed by Section 108(2) and Section 111).

Frequently asked questions