Moment guide · FY 2026-27

I am carrying forward business losses

How many years can business losses be carried forward?

Non-speculative business losses carry forward 8 years and set off only against business income, while speculative losses carry forward 4 years against speculative profits only. Unabsorbed depreciation is different — it carries forward indefinitely and offsets any income. All carry-forwards require the loss-year return to be filed by the due date under section 139(3).

The #1 trap

Missing the on-time filing requirement — a loss not claimed in a return filed by the due date can never be carried forward, even if the loss is genuine, because section 139(3) conditions carry-forward on a timely return. The second trap: unabsorbed depreciation is not subject to the 8-year cap, so many taxpayers wrongly let it expire.

Suresh, restaurateur who closed a loss-making outlet

Suresh's restaurant business made a loss of ₹12,00,000 in FY 2024-25, and he filed his ITR by 31 July 2025, which satisfies the section 139(3) requirement that preserves the loss. In FY 2025-26 he starts a catering business that earns ₹9,00,000, and he sets off ₹9,00,000 of the carried-forward business loss against that business income under section 72, leaving ₹3,00,000 to carry into the next year. Because the loss is non-speculative, it can be set off only against business income — not against his interest income or salary — and it can be carried for up to 8 years. His brother, who trades intraday, has a speculative loss of ₹4,00,000; that loss can offset only speculative profits and expires after 4 years, which is far shorter than the 8-year window. Suresh also has a building for the old restaurant with written-down value, and the unabsorbed depreciation from FY 2024-25 is ₹2,50,000. Unlike business losses, unabsorbed depreciation under section 32(2) carries forward indefinitely and can be set off against ANY income, including his rental income, so he sets it off this year and keeps the balance for future years without any time limit. If Suresh had missed the 31 July 2025 deadline and filed a belated return, the entire ₹12,00,000 loss would be lost forever, because carry-forward requires a timely return. He maintains the loss computation register across years so the set-offs are traceable. A quick call with us dials in the final figure. Suresh also keeps the loss computation for each year, because the set-off schedule in the ITR asks for the year-wise break-up and the department verifies the carry-forward against the prior returns. If he has multiple businesses, the business loss is set off against the aggregate business income first, and any unabsorbed loss is carried forward in the same order. The speculative-loss rules are stricter: his brother's intraday loss cannot touch his salary or F&O profits, and the four-year window is shorter than the eight years for normal business losses. If Suresh had income from capital gains or other sources, the business loss still cannot offset them, because section 72 restricts the set-off to business income. The unabsorbed depreciation, by contrast, is set off against any income in the current year and the balance carries forward without a time limit. A quick call with us dials in the final figure.