If there is a loss from any source of income under any head, then it is to be set off against income from any other source under the same head. The exceptions to this rule are
- Loss from speculation business- Loss in speculation business can be set off only against the profit in a speculation business.
- Long term capital loss – Long term capital loss can be set off only from long term capital gain.
- Loss from speculation business – Any loss from any specified business under section 35AD shall not be set off except against profits and gains of any other specified business.
- Loss from activity of owning and maintaining horse race – Loss from business of owning and maintaining horse race can be set off only against profit from such business.
- Loss cannot be set off against winning from lotteries, crossword puzzles etc. [Sec 58(4)] – a loss cannot be set off against winnings from lotteries, crossword puzzles, races including horse races, card games or games of any other sort or gambling or betting of any form or nature.