Yes, friends, how are you?
I hope you are doing well.
I am your friend, C.S. Shreya Gupta.
Sir, we were discussing in the last lecture about set-off
and carry-forward of the losses.
It is a great concept.
The concept of converting profit into loss.
How to make the income of crores of rupees zero.
I will quickly recapitulate the concept.
In the last lecture, I talked about if you have a business.
We have a business.
And there are 3-4 businesses.
Business no. 1, 2, 3 and 4.
Here is the income of 10 lakhs.
And here is the loss of 40 lakhs.
In that case, what did I say?
Net-off all the total.
First, net-off.
How will it be net-off?
By inter-source adjustment.
The income tax that you will pay will not be like 10 lakhs,
10 lakhs, 10 lakhs and minus.
You will net-off.
And what is the meaning of net-off?
Inter-source adjustment.
The income of this source, the loss of 40 lakhs,
I will cover the loss of 40 lakhs from here.
If it is not from here, then I will take it from here.
I am net-offing.
It is called inter-source adjustment.
So, it is still of minus 10 lakhs.
I called it inter-source adjustment.
Inter-source adjustment.
Inter-source.
After this, next.
This was the first point.
Next, I said that even if the loss of 10 lakhs is saved,
then you look for another head of income that there is no
profit there.
For example, here I had the income of the other source.
I had the income of the other source.
And that income was of 5 lakhs.
It was the income of 5 lakhs.
So, I will adjust the loss of 5 lakhs from the income of 5
lakhs.
Even now, my loss of 5 lakhs will be saved.
All my incomes of this year are finished.
Although this year,
I had earned 30 lakhs and 5 lakhs.
I had earned 35 lakhs.
Although I had earned 35 lakhs and I should have given the
income tax above 35 lakhs.
But what did the government say?
That you have made a loss of 40 lakhs in a business.
You have made a loss of 40 lakhs in a business.
For this, you make all these adjustments.
After adjustment, your loss will be of minus 5 lakhs.
This year's income has become zero.
The loss of minus 5 lakhs will be carried forward next year.
And after carrying it forward, only from the business,
because it is a business loss, try to reduce it from the
income of the business.
And for how many years should it be carried forward?
For 8 years.
In the last lecture, what were the limits of carry forward?
8 years, 4 years.
Unabsorbed depreciation was unlimited.
The loss of 35 AD was unlimited.
We had studied some of these things.
A great concept was going on.
This topic is just for 5-7 minutes.
Then we will finish it.
We had talked about inter-source adjustments.
Now come to inter-head adjustments.
Which loss can't be adjusted with which income?
The loss of 10 lakhs, from which head of income can I
reduce it?
From which head of income can't I reduce it?
We will discuss about it.
First click a photo of it.
Take a screenshot of it.
Let's discuss and finish it.
Inter-head adjustment.
This is section 71.
What does it say?
Loss under one head of income can be set up against income
under any other head.
For example, business loss can be set up against house
property's income.
But in which year does it happen?
In the year of loss.
It doesn't happen in the next year.
It happens in the year of source of income.
There are some exceptions.
Loss under business and profession cannot be set up against
income under head salaries.
Why is the government saying this?
Government needs tax from somewhere.
You are such a person that you have a salary of 10 lakhs.
You are running a small business.
You have claimed a loss there.
You have shown a loss of 5-7 lakhs.
What will your mind do?
Suppose you don't have any other business.
You have a salary of 10 lakhs and only one business.
You have a loss of 5 lakhs.
Will you try to set up a loss of 5 lakhs with your salary?
You have a salary of 10 lakhs.
It will be a huge loss for the government.
Government will say that it could have easily created a TDS
on salary income.
It could have easily created a collection.
But he turned out to be such a cunning person.
He adjusted the loss of business with salary.
Sir, we need some collection.
We won't give you even if we know the loss of business.
If you give so much income to people that you get income
from salary as well as business, then you can't adjust the
loss of business with salary at any cost.
You can never adjust the loss of business with salary
income.
This is an exception.
Loss under the head capital gain cannot be set up against
income under any other head.
What does it say?
It says that it is a loss of capital gain.
I bought a property worth 50 lakhs and in an emergency
situation
I sold that property worth 40 lakhs.
My capital loss of 10 lakhs short term or long term,
whichever you like,
I can't adjust it with any other head of income.
If it is a loss of capital gain head, then I have to adjust
it with capital gain head's income.
I can't reduce it with any other head of income.
If it is a loss of speculation, like online rummy, dream
11, speculation loss, loss under specified business under
35% and loss from the race horse, that cannot be set up
against income under any other head.
It will be very easy.
You will play chess, get a loss of 5-6 lakhs, you will
adjust it with another head of income.
Government says that it won't happen.
If it is a loss of speculation, then you have to reduce the
loss of speculation with another head of income.
And this is the last of house property.
Losses from house property can be set up against income
under any other head to the extent of 2 lakhs.
If there is any remaining loss, then it can be set up
against income from house property.
If there is a loss of house property, try to understand the
case.
There are 2-3 house properties.
It is a general thing.
It is the job of a person's rental.
For example, there were 2 house properties.
In one, there was a loss of 5 lakhs in the whole year.
In the other, there was a loss of 3 lakhs.
First, you will make an inter-source adjustment.
For example, make it 15 lakhs.
Then, you will make an inter-source adjustment.
You will turn off the net.
You will get 12 lakhs.
Because it was of 3 lakhs, it got adjusted completely.
What if it was of 30 lakhs?
What would you have done?
In this case, what would have been your answer?
Your answer would have been a balance of minus 15 lakhs.
The balance of 15 lakhs would still be there.
You made an inter-source adjustment.
The balance of 15 lakhs is still there.
Now, I will move to inter-head adjustment.
In inter-head adjustment,
I will see if I have a business income.
He will say, yes, you have a business income of 50 lakhs.
Yes, that is fine.
From the 50 lakhs income, adjust a loss of 15 lakhs.
But before doing this, read this exception which says that
if you adjust the loss of a house property from another
head, you will adjust it up to a maximum of 2 lakhs.
So, in this case, the 50 lakhs is your PGVB's income.
You will adjust a loss of a maximum of 2 lakhs.
The remaining 13 lakhs, you will carry forward it to the
next year.
Next year, from your house property's income, reduce it.
Next year, when you carry forward it, it will become a
broad forward.
Broad forward losses are never adjusted from another head
of income.
They are always adjusted from the same head of income.
Sir, this was the point.
Next.
Are there any losses that you cannot set off and carry
forward?
What do you mean?
What I mean is, if you have these types of losses, you
cannot adjust that loss from anywhere.
Neither this year, nor InterSource, nor InterHead, nor
InterSource next year.
Look at the type of losses.
It is a loss of gambling.
If you allow the loss of gambling, every person will play
gambling everyday.
Sitting on the road.
You know, in the afternoon, 4 people make a square and play.
They will play gambling everyday.
They will lose money in gambling.
They will reduce the income from somewhere else.
They will show zero income.
Consequently, the tax will also be zero.
Government has to punish them.
Government will punish them.
Do you play gambling?
Do you have income from gambling?
If you have income, then 30% tax.
If you have loss, then there is no adjustment from anywhere.
Betting, card game.
If the loss is from an exempt source, then there is no
adjustment from anywhere. In the last lecture, we have seen
the maximum period. We have seen the order of 8 years, 4
years, current year depreciation and then broad forward
loss.
Why broad forward loss first? Because it has a limit of 8
years. You cannot take it beyond that.
We will see if there is any point left in this. By the way,
we have already covered this.
There is one more point. You have to submit the income tax
return of that year.
Meaning of this is, for example, you had an income of 1
crore this year.
You had an income from business and no income from head of
income.
One source had an income of 1 crore in business and the
other source had a loss of 1.25 crore.
You turned off the internet and adjusted the inter-source.
You had a loss of 2.5 crore.
Now I have to carry forward that loss of 2.5 crore next
year.
But I will carry forward it only when I will file the ITR,
income tax return of that year.
And I will inform the government that Nirmala Tai, I have
lost 2.5 crore this year.
Please order me to adjust my income from next year.
This is the section.
Section 80 says, there is a loss of business, loss of
power, loss of specified, loss of capital gain, loss of
horse race, loss of horse race horse maintenance, which has
not been determined in percents of return filed, cannot be
carried forward and set off.
You cannot carry forward the loss which you have not shown
in return.
SSE must have filed the return in order to carry forward
the loss.
Such a return should be filed within the time allowed.
But this condition does not apply in house property and
unabsorbed depreciation loss.
You will be able to carry forward the loss of house
property.
You will be able to carry forward unabsorbed depreciation,
my dear, if you have not filed the return.
Rest, you cannot carry forward any other loss without
filing the return.
These are the points, sir.
You see, sir, this is not a practical question.
You see, he has a salary of 1.5 lakhs, speculation business
income, loss of non-speculation, short-term capital gain,
long-term capital loss, loss of lotteries.
How will he get taxable income?
How will he get adjustment?
He has a salary income.
He will not face any loss from salary income.
It is a speculation business.
He has reduced non-speculation from speculation business.
But the loss of speculation, the loss of lotteries, goes
only from the income of lotteries.
But I can reduce the loss of non-speculation from the
income of lotteries, sir.
And then short-term capital gain is added, the income of
lotteries is added.
The taxable income of 2,70,000 rupees is added.
Pay attention to this.
The loss of non-speculation will be reduced from the income
of non-speculation.
But the income of non-speculation has been given.
And there is a loss of other business.
What difference does it make if adjustment is taken from
this?
Come here.
See, we have read the order of setup.
See, it is the same.
Income from owning and maintaining racehorse is 75,000.
The loss of other business is 85,000.
And the loss of textile business is 50,000.
And the loss of activity of owning is 96,000.
Now, what did I tell you about the loss of broad forward?
That the loss of the first thing should be less than that.
The loss of textile business is 50,000.
It will be less than 85,000.
Come here.
He must be doing this.
He has taken 75,000.
And I had told you about 96,000.
If the income of racehorse is 75,000, carry forward the
loss of previous years.
So, it will be less than the income of that source.
If the income of 75,000 is there, reduce the loss of 96,000.
There will still be some loss.
And if the income of 85,000 is there, reduce the loss of
that source.
Come here.
He is doing this.
The loss of 95,000 is different from the loss of last year.
But it will be different till 75,000.
Because the income is 75,000.
And the income of 85,000 is there.
So, reduce the loss of last year's 50,000.
Pay attention to this.
In carry forward, the condition is that the loss of the
source, the loss of the business, will be less than the
income of that business.
If he wanted, he could have done this.
The pending of 21,000, the racehorse of 96,000, 75,000 was
adjusted.
21,000 was left.
But the 21,000 government is saying that if you come to
inter-head adjustment, next year also, then you are a very
clever man.
You will show such a loss that all your head of income will
be finished.
Next year also, all your head of income will be finished.
That's why inter-source,
next year only adjust the source where the loss was.
Okay, sir?
This is the point.
We have already covered this big topic.
I don't think there is anything left.
I have already covered all these things.
What is the meaning of speculative and non-speculative?
How to adjust it?
Sir, this was our set-off and carry-forward of losses topic.
How did you find the topic?
It was a great topic.
Film industry people use this topic a lot.
They make a super hit film.
Profit of 200 crores.
They make a loss film on purpose.
Loss of 40 crores.
Out of the income of 200 crores, adjust the loss of 40
crores.
Pay the tax of 160 crores.
Many smart people are running in the market.
What is the difference between us and you?
These are the things, sir.
Set-off and carry-forward of losses.
Our topic ends here.
There was nothing.
It was a very interesting topic.
Your notes are ready.
I am also putting questions in it.
So that you can practice.
If you have any problem, do contact me.
Thank you very much.
Bye-bye.