What is the meaning of inter-head adjustment in Income Tax ?

What is the meaning of inter-head adjustment in Income Tax?

​​​​​​​​After making intra-head adjustment (if any) the next step is to make inter-head adjustment in Income Tax. If in any year, the Income taxpayer has incurred loss under one head of income and is having income under other head of income, then he can adjust the loss from one head against income from other head of Income,

Example: – Loss gain under the head of  “House Property”  to be adjusted against salary income.

Restrictions to be kept in mind while making inter-head adjustment of loss ( Income tax)

Following restrictions should be kept in mind before making inter-head adjustment in Income tax:

• Before making inter-head adjustment, the Income taxpayer has to first make intra-head adjustment.
• Loss from speculative business Income cannot be set off against any other income. Note- However, non-speculative business loss can be set off ​against income from speculative business.

Speculative business income:- Income from intraday equity trading is considered as speculative.

Non–speculative business income: – Income from trading Futures and Options (both intraday and carry forward) on is considered as non–speculative business.

• Loss under head “Capital gains” cannot be set off against income under other heads of any income.
• No loss can be set off against income from winnings from lotteries, crossword, card game, race including horse race, Etc and any other game of any sort or from gambling or betting of any form or nature.
• Loss from the business of owning and maintaining race horses cannot be set off against any other head of income.
• Loss from business specified under section 35AD of Income tax Act cannot be set off against any other income (section 35AD of Income tax Act  ​ is applicable in respect of certain specified businesses like setting up a cold chain facility, developing and building housing projects, setting up and operating warehousing facility for storage of agricultural produces, etc.)
• Loss from business and profession cannot be set off against income chargeable to Income tax under the head “Salaries”. ​

Other F&Q

What is assessment under section 143(1)? || Scope of assessment under section 143(1)

Am I required to keep a copy of the Income Tax Return filed as proof and for how long ?

Which Income Tax appeals (Income tax appeal pending) are covered under the Vivad se Vishwas?

What is the procedure adopted for making the assessment under sec 143(3) of Income Tax Act i.e. scrutiny assessment?