The common doubt for many of us is about Income Tax Return in the case of Loss. Read the complete article to know whether it is mandatory to file Income Tax Return of loss or not.
Is it necessary to file Income Tax Return in the case of Loss?
As per Section 139(3), if the taxpayer has incurred a loss in the previous year then it is not mandatory to file Income Tax Return for such loss. This doesn’t apply to the companies and firms as they require to file Income Tax Return even in the case of Loss. But, filing the return in case of loss gives you a benefit which is covered in below sections.
Under Section 157, first the return of loss must be submitted on or before the due date and next the loss has to be determined by the assessing officer (AO). The Assessing Officer needs to notify the taxpayer by an order in writing the amount computed/calculated by him (AO) which the taxpayer is entitled to carry forward.
In case, any taxpayer has sustained a loss in any previous year under the heads
1. Capital gains and/or
2. Profits and gains of business or profession
- If he wants that loss to be carried forward for the next assessment years (AYs) then, he “may” furnish a return of loss in the prescribed form within the time allowed (i.e. within the due dates).
- This applies only in respect of loss occurred under above given heads.
In case, any taxpayer has sustained a loss in any previous year under the head ‘Income from House property’
- If any loss occurred under the head ‘Income from House Property’, then it is allowed to be carried forward even though you have filed the income tax return after the due date (i.e. within the time allowed for the filing of return).
- If the assessee submits a return of loss in response to the notice or intimation under section 142(1), without submitting before, then such loss can’t be carried forward unless it is a loss under the head ‘Income from House Property’.
If you are going to set off the loss occurred under one head against the income under another head, then it is not required to file an Income Tax Return of loss under this head.
What is the benefit of filing Income Tax Return in the case of Loss?
On filing Income Tax return in case of loss, the benefit is that the loss sustained can be carried forward to the future years and set-off against income arising in the future years. By doing this, the taxable income of the future years will be reduced which leads to the reduction in tax payable in future years.
So, it is better to file income tax returns even in the case of Loss.
Return of Loss (Section 139)
Any taxpayer who has sustained a loss should file a return of loss by the due dates mentioned below.
Time for filing return of income (Section 139 (1))
The due dates for filing returns of income are given below.
|S.No||Different Situations||Due Date of submission of return|
|1.||Where the taxpayer is required to furnish a report under section 92E pertaining to international/specified domestic transaction(s).||November 30|
|2.||Where the assessee is a company (not having international or specified domestic transaction (s)).||September 30|
|3.||Where an assessee is a person (not having international or specified domestic transaction(s)) other than a company.|