Comparison of Section 108 "Set off of losses under same head of income." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....tax administration that applies set-off rules. Effective date or decision date: Not stated in the document. Background & Scope Statutory hook: Chapter VII, "Set off, or Carry Forward and Set off of Losses," Income-tax Act/Bill, 2025. The clauses address intra-head set-off of losses. The text explicitly excludes "Capital gains" from the general rule in sub-section (1) and then dedicates sub-section (2) to rules for capital gains losses u/ss 72 to 90. Definitions of "short-term capital asset" and "long-term capital asset" are Not stated in the document. Cross-references: sections 72 to 90 are referenced as the computational framework for capital gains; the content of those sections is Not stated in the document. Statutory Provision Mode T....

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....en taxed differently) while allowing short-term losses to mitigate capital gains across categories. Exceptions/Provisos No provisos, exceptions, time-limits or carry-forward rules are stated in Clause 108 of the Bill. Carry-forward of unabsorbed losses, conditions for set-off in subsequent years, or special carve-outs (e.g., for specified transactions) are Not stated in the document. Illustrations * Example 1: Taxpayer A has, in one tax year, a loss of Rs. 100,000 on transfer of a short-term equity holding (short-term capital loss) and a gain of Rs. 80,000 on transfer of a long-term property (long-term capital gain). Under Clause 108(2)(b) the short-term capital loss can be set off against the long-term capital gain. (All numeric fac....

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.... (if any) from transfer of another long-term capital asset; (b) loss from a short-term capital asset shall be set off against gains (if any) from transfer of any capital asset. Practical impact: The Act's text appears to permit short-term losses to be set off against any other capital asset income (which would include both STCG and LTCG), and long-term losses only against other long-term capital income. The Bill's text expressly states the converse ordering but functionally is similar except for phrasing: Bill explicitly allows short-term losses to be set off against gains from any capital asset (including long-term), and restricts long-term losses to long-term gains only. The primary practical consequence is clarity: the Bill is e....

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....ng separate rules under clause (2). * Overall Substance Difference: There is no substantive divergence in the fundamental rule that losses under the same head can be set off against other sources within that head and that capital gains have specialized set-off rules distinguishing short-term and long-term losses. The Bill's text is slightly different in ordering and phraseology concerning which category of loss can be set off against which gains. Practical impact: Tax practitioners can treat the provisions as substantively aligned; however, reliance on the enacted Act (Section 108) rather than the Bill text is necessary for certainty. The practical effect on taxpayers' ability to set off capital losses appears unchanged: long....