Filing Income Tax Required in case of Loss- Yes or No?

Section 139(3) – Filing Income Tax in case of Loss

• In case of an Individual Tax payer, if any loss was incurred in the previous financial year then filing a tax return is not mandatory

• Tax return for loss is compulsory for companies and firms and the
  

• provisions are as follows:

• If the loss arises under the head “Profits and Gains of Business and Profession” or under the head ‘Capital Gains’. Tax return filing is mandatory in case the firm wants to carry forward this loss and offset with the future income. Availability of this option is only possible if the tax return indicating the loss is filed within the due date.

• In case the loss arises under the head “House or residential Property”, the loss could be carried forward even though the tax return is filed after the due date.

• If the loss is filed for return under Section 142(1), except for the loss under “House property”, other losses could not be carried forward. However, the unabsorbed depreciation could be carried forward for such cases.

• In case the loss is to be offset against some income in other category for the same year, it is permitted to offset even though return is filed after the due date.

• Loss of the earlier years could be carried forward if the return of losses for those years were filed with due dates and those losses were assessed.

The advantage of filing the loss returns is that it allows one to carry the loss forward which reduces the tax liability for the future years. Hence, it is highly advisable to file the return for loss.