Blog > Section 139(3) - By When Does One Need to File a Loss Return?

Section 139(3) - By When Does One Need to File a Loss Return?

by Varun Advani | 27 June 2015

By when does one need to file a loss return? Section 139(3)      

Everybody, once in a while, faces the issue of making a loss in whatever transaction/business they’ve entered into. Thankfully the income tax act has been kind enough to give us tax breaks on the losses we’ve made. But these losses can only be adjusted against the income we’ve earned if the income tax return has been filed using the proper income tax return form and also if the same has been filed within the specified time allowed as per section 139(1). Therefore the following losses cannot be carried forward if the return of loss is not submitted on time –

1.     Business loss (speculative or otherwise) -   It is important to note that business loss once carried forward can only be adjusted against profits and gains for business and profession. This is important to note for all of the self employed professionals and individuals trading in derivates. If they’ve made losses during the current year, then the can adjust the same against any other head of income except salary. However if they cannot adjust the entire losses and decide to carry the same forward, the next year they can only adjust such losses against business gains.


2.     Capital loss – Loss under the head capital gains is a very common feature with people making short term capital losses while trading in equity shares. The loss under the capital gains however, can only be adjusted against gains made under this head of income only. Therefore, if a taxpayer has made short term capital losses, he can adjust the same against short term or long term capital gains only (Except LTCG on equity shares). However long term capital losses can be adjusted against long term capital gains only (Except LTCG on equity shares). The above mentioned treatment remains the same whether or not the loss is carried forward or adjusted during the current year itself.

It is extremely important to note that the above mentioned provisions are NOT applicable for loss under the head house property. So all those salaried employees out there, with home loans, can breathe a sigh of relief. Even if you if delay the filing of your income tax return for some unforeseen reason, you shall still be liable to get the deduction for the interest repayment on your home loan.


Efiling of Income Tax