Section 109
Section 109: set off of losses under any other head of income
Section 109 extends loss set-off beyond a single head of income: after Section 108 handles set-off within the same head, this section allows a residual loss under one head to be set off against income under a different head in the same tax year - subject to three important restrictions.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
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
Can a business loss reduce my salary income?
No - Section 109(1)(a) specifically bars setting off a loss under "Profits and gains of business or profession" against income assessable under "Salaries".
Is there a limit on setting off a house property loss against other income?
Yes - a loss under "Income from house property" can be set off against income under any other head only up to ₹2,00,000 in a tax year.
Can a capital gains loss be set off against my salary or business income?
No - Section 109(2) bars setting off a capital gains loss against income under any other head for that tax year.
Related sections
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