Set off and carry forward of losses from specified activity
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 115(1) of Income Tax Act 2025
(1) Any loss incurred by the assessee in the specified activity during any tax year, shall not be set off against the income, if any, from any source other than specified activity for the said tax year.
Section 115(2) of Income Tax Act 2025
(2) The unabsorbed loss from the specified activity for any tax year shall be carried forward to the subsequent tax year and shall be set off,––
(a) only against the income from specified activity, if any, computed for such subsequent tax year, and so on; and
(b) only when the specified activity is carried on by the assessee in that tax year.
Section 115(3) of Income Tax Act 2025
(3) The unabsorbed loss from the specified activity referred to in sub-section (2) shall not be carried forward for more than four tax years immediately succeeding the tax year in which such loss was first computed.
Section 115(4) of Income Tax Act 2025
(4) In this section,––
(a) “income by way of stake money” means the gross amount of prize money received by the owner of race horses participating in horse races on their winning a particular position in such race;
(b) “loss incurred by the assessee in the specified activity” means the amount by which the income by way of stake money, if any, falls short of the expenditure, not being capital expenditure, incurred wholly and exclusively for maintaining race horses;
(c) “race horse” means a horse upon which wagering or betting may be lawfully made in a horse race;
(d) “specified activity” means the activity of owning and maintaining race horses;
(e) “unabsorbed loss from the specified activity” means any loss computed in respect of the specified activity carried on by the assessee during the tax year, which has not been, or is not wholly, set off against income, if any, of the specified activity under sub-section (1) for the said tax year.