Carry Forward and Set Off of Losses

Tax Glossary Definition

Carry Forward and Set Off of Losses

Carry Forward and Set Off of Losses – The carry forward and set off of losses are tax mechanisms that permit individuals or businesses to apply losses from one financial year against income or profits earned either in the same year or in subsequent years. This provision helps minimize taxable income, easing the tax burden during unprofitable periods and promoting business continuity.

Example: If a company records a ₹5 lakh loss in FY 2023–24, it can carry forward that loss to offset profits in future years, as allowed under the applicable tax regulations.

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