There is no order or priority to setoff loss. You can setoff house property loss with any other income in the same year. In case of carryforward and setoff of loss house property loss can be setoff with house property income.
Applicability of benefit of 24(b) while filing income tax returns
I am a professional earning professional income. I have earned LTCG from selling of shares last FY. It amounts to rs.350000/-(rs.3.5 lakhs). I have paid rs.2,00,000/- towards interest payment for the housing loan that i took from a distant relative. My total taxable income (minus any LTCG) is roughly rs.25,00,000/-. I therefore come in the 30% bracket. LTCG tax I expect would be rs.25000/-(3.5L-1.0L=2.5L. Then 2.5L at 10%=25000). But when i tried to avail 24(b) benefit (deduction for the interest paid towards home loan repayment). it seen that the rs.2,00,000/- is getting deducted from the LTCG. What i mean is when i add loan interest repayment, the rs.2,00,000 is getting deducted from the rs.3,50,000/- for LTCG. LTCG thus becomes rs.1,50,000/- and therefore i think my LTCG tax should become rs.5000/-. My question is.....is it possible to get 24(b) availed wherein rs.2,00,000/- is deducted from total income (ie from my professional income of rs.25,00,000/-). ? I do have a CA. But it seems he came across this problem for the first time and is unsure about how this all works. I mean he says, interest repayment is getting deducted from LTCG....because thats how the "system" is autocalculating! He however is unsure as to what would have happened if I did not have any LTCG. He is not aware as to the provisions (if any) that mandates that 24(B) deductions would be made from only LTCG. I am therefore putting these questions here for clarity. These are therefore my questions: 1)If there is LTCG and other incomes.....is there any rule as to from which head would the rs.2,00,000/- deduction would be made? 2)In my case, is there any way i could deduct the rs.2,00,000/- from the total income (and not from LTCG)? 3) Atleast in next year is there any way i could use that deduction be deducted from total income and not from LTCG?
Asked 2 years ago in Income Tax
Hello,
1. No there is no such rule, you amend the priority for set off of losses.
2. Yes, you can set off the Rs. 2,00,000/- from the total income (and not from LTCG)
I hope this answer satisfies your requirements. For a detailed resolution of your query, you can contact us directly at badlaniassociates at Gmail or take a phone consultation.
Regards,
CA Hunny Badlani
Badlani & Associates
Please have a look at this: Section 71 of the Income Tax Act: Set off of loss from one head against income from another: (1) Where in respect of any assessment year the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has no income under the head “Capital gains”, he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head. (2) Where in respect of any assessment year, the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has income assessable under the head “Capital gains”, such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head “Capital gains” (whether relating to short-term capital assets or any other capital assets). (4) Where the net result of the computation under the head “Income from house property” is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) The subsection (2) and (4) says that loss from house property will be set off against "capital gains" first. In my understanding , this is what is happening. Please clarify
Asked 2 years ago
- Sub section 4 is only for AY 1995-96 & 1996-97. Order of priority is not mentioned in sub-section 1 and 2. In your case sub-section 3A is applicable.
There is no rule as such but as per the software it deducts the loss as per the rules defined by income tax department and not available in law and hence if it is a substantial loss you can raise an appeal against your intimation order and fight the case against CIT(A).
You can surpass the system of income tax return prepared by Department.
Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.
Thank you.
Ask a Chartered Accountant
Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
Ask a CA