Section 71A of ITA, 1961 : Section 71A: Transitional Provisions For Set Off Of Loss Under The Head Income From House Property

Explanation using Example

Imagine Mr. Sharma owns a house that he has rented out, but the interest on the home loan he took to purchase this property is higher than the rental income he earns. For the financial year 1993-94, after deducting the interest on the borrowed capital, he has a loss of ₹1,50,000 under the head "Income from house property". According to Section 71A of the Income-tax Act, 1961, Mr. Sharma can carry forward this loss to the next financial year, 1995-96. If he has any income from other sources like salary or business in that year, he can set off this carried forward loss against that income. If the loss is not fully set off in 1995-96, he can carry forward the remaining balance and set it off against his incomes in the financial year 1996-97.