TaxTMI 
TaxTMI 
Understanding Loss Set-Off or carry forward and set-off of losses in Clause 108 of the Income Tax Bill, 2025 Vs. Section 70 of the Income Tax Act, 1961
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....come Tax Bill, 2025, addresses the set-off of losses under the same head of income. This provision forms part of Chapter VII of the Bill, which deals with the set-off or carry forward and set-off of losses. The clause is significant in the context of income tax legislation as it provides clarity and structure for taxpayers on how to manage losses incurred from different sources under the same head....
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.... are common. Detailed Analysis Clause 108 is divided into two primary subsections: 1. Subsection (1): This subsection allows the assessee to set off a loss from any source under any head of income, other than capital gains, against income from any other source under the same head for that tax year. This provision aligns with the principle of net income taxation, ensuring that only the net incom....
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....s associated with these asset classes. This segregation ensures that taxpayers cannot exploit tax benefits by offsetting long-term capital losses against short-term capital gains, which may be subject to different tax rates. Practical Implications Clause 108 has significant implications for taxpayers, particularly those with diversified income portfolios. The provision requires taxpayers to main....
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....on 70(1) allow for the set-off of losses from one source against income from another source under the same head, excluding capital gains. This consistency reflects a stable policy approach to handling losses across different tax regimes. 2. Capital Gains Treatment: The treatment of capital gains in Clause 108(2) is more refined compared to Section 70. While Section 70 separates short-term and oth....