Types of Losses Eligible for Carry Forward

• Business losses excluding speculative losses can be carried forward.
  
• Speculative business losses are separately tracked and carried forward.
  
• Capital losses (short-term and long-term) are also eligible.
  
• Unabsorbed depreciation is not treated as a loss but can be carried forward indefinitely.
  
• Loss from owning and maintaining racehorses is separately treated.
  

Conditions for Carry Forward

• The company must file the income tax return within the due date under section 139(1).
  
• The return must declare the losses to claim carry forward.
  
• Losses cannot be carried forward if the return is filed late.
  
• Continuity of business is not necessary for all loss categories.
  
• Some losses require continuation of shareholding pattern as per section 79.
  

Set-Off Rules in Subsequent Years

• Business losses can be set off only against business income.
  
• Speculative losses can be set off only against speculative income.
  
• Short-term capital losses can be set off against both short-term and long-term capital gains.
  
• Long-term capital losses can only be set off against long-term capital gains.
  
• Unabsorbed depreciation can be set off against any income except salary.
  

Time Limits for Carry Forward

• Business losses can be carried forward for up to 8 assessment years.
  
• Speculative business losses also have an 8-year carry forward limit.
  
• Capital losses can be carried forward for 8 years from the year of loss.
  
• Unabsorbed depreciation can be carried forward without any time limit.
  
• Losses beyond the permissible period lapse automatically.
  

Documentation and Compliance

• Maintain proper computation and assessment records of losses.
  
• Disclose carry forward amounts in income tax return forms.
  
• Confirm the eligible amount in Form ITR-6 schedule CFL and UD.
  
• Losses must be certified in the tax audit report, if applicable.
  
• Loss utilization should be tracked year-wise for compliance.