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Filing a return for a year of little income

Harsha (Software professional) (214 Points)

05 March 2014

Dear Experts,

Very soon, the financial year is closing and we need to start preparing for filing our returns.

In my case, this year I have income only from bank interests as I am on a career break. So my total income would be far below the exempted limits required for filing a return.

But I have a few years of short-term stock-market losses which I intend to carry forward. Most probably my short-term gains would be negative this year too , unless there is a miracle in the market!!!

So I believe that it would be still prudent to file a return for AY 2014-15 too to carry forword my losses. Please clarify.

If there are any online guidelines, manuals for guidance for the latest tax-filing, please let me know.

Regards,

Harsha

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4 Replies

Manoj Mehta (Head Of Department (Accounts & Finance)) (1479 Points)
Replied 05 March 2014

Dear Harsha I suggest you to file your return as you want to carry forward losses. You can only carry forward losses if u file your I.t return before due date. So file your return by 31st July.

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Ashwini. K (Partner in KGR&CO) (96 Points)
Replied 05 March 2014

Dear Sir,

With reference to your above query, I would like you to consider the following noteworthy points.

A) Set off and carry forward of Loss under the head of Capital Gains is covered under section 74 of the Income Tax Act 1961.

As per this section :

1. Short term capital loss could be set off either against the short term capital gain or long term capital gain.

2. Long term capital loss could be set off only against the Long term capital gain. It cannot be set off agianst the short term capital gains.

3. If loss could not be set off then unabsorbed loss would be carried forward for set off till 8 assessment years.

B) Section 80 of the income tax act 1961 provides that unless the retun of loss has filed in accordance with section 139(3) of the Income tax act 1961 the assessee cannot carry forward the loss.

C) Section 139(3) requires an assessee to file the return of income as per section 139(1) which means that the return of Income should be filled with the due dates and in the prescribed forms.

Summary.

1. Try to sett off the capital loss. If could not be set off then carry forward the same to the next assessment year.

2. To avail the benefit of carry forward or set off, it is mandatory for an assessee to file the return of income.

3. Hence, even if there is no income under any head except the capital loss, It is sugessted to file the return of Income so that you could avail the benefit of carry forward. If return is not filled then carry forward of the loss would not be possible.

I hope I have answered your query.

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