Restriction on set-off of loss from House property
Summary : As per Finance Bill 2017 w.e.f FY 2017-18 (AY 2018-19) Section 71 of Income tax Act is proposed to be amended to restrict the set-off of loss under the head ‘Income from house property’, in any assessment year against any other income, up to Rs 2,00,000. The unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years.
Section 71 of the Income tax Act relates to set-off of loss from one head against income from another. In line with the international best practices Finance Bill 2017 proposed to insert sub-section (3A) in the said section to provide that set-off of loss under the head “Income from house property” against any other head of income shall be restricted to two lakh rupees for any assessment year. However,the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years in accordance with the existing provisions of the Act.
This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 and subsequent years.
[Clause 31]
Relevant Clause 31 of Finance Bill 2017
Amendment of section 71.
31. In section 71 of the Income-tax Act, after sub-section (3), the following sub-section shall be inserted with effect from the 1st day of April, 2018, namely:—
‘(3A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head “ Income from house property ” is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds two lakh rupees, against income under the other head.’.
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