Tax Book 2023

Losses Chapter- 14

Section

Topic covered Topic covered

Section Rule

Chart of set off and carry forward

of losses

104 Foreign losses

Chart of losses order of set off

56 Set off of losses 59AA 231D Group taxation

56A

Set off of losses of companies

operating hotels

59B Group relief

57 Carry forward of business loss 98 Change in control of an entity

57 A

Set off of business loss

consequent to amalgamation

Practice questions with solutions

58 & 59 Carry forward of speculation

business & capital losses

(^) MCQ’S with solutions

59A

Limitations on set off & carry

forward of losses

ICMAP & CA Mod C past papers

theoretical questions

The present status of set off of and carry forward of losses under the five heads of income under the
income tax Ordinance, 2001 are as under:

Chart of set off and carry forward of losses:

SR. HEAD OF INCOME RULES FOR SET OFF RULES FOR CARRY FORWARD

1. INCOME FROM
   SALARY

a. There can be no loss under this head as a

person deriving salary income is not

allowed to deduct expenses incurred in

deriving salary income [u/s 12(4)].

b. Salary income cannot be used to set off

the loss under any other head of income.

As there can be no loss under

this head hence the question of

carry forward is not applicable.

2. INCOME FROM

PROPERTY

a. There can be loss under this head of

income as it is chargeable to tax under

normal tax regime and expenses can be

deducted against property income u/s 15A.

b. From Tax year 2017 the loss under normal

tax regime under this head of income will

be for a Company. However for individuals

/ AOP there may also be loss under this

head of income as from tax year 2022 they

will file their income tax return under NTR.

c. Loss under this head can be set off

against any other head of income

chargeable to under NTR except salary

income.

d. Income from property can be used to set

off the loss under any other head of

Unadjusted loss under this

head cannot be carried

forward.

14 Losses

Chapter