What is Return of Loss?

Return of loss meaning in income tax refers to the fact that in case there is a loss of income in a year, then it is not mandatory for individuals to file the Income tax return. If you are someone who is self-employed or runs their own business, then they will have to file the ITR even if they suffer a loss.

Under the return of loss section 139(3), an individual can skip filing the ITR for a particular assessment year in which they suffered a loss of income. This is not applicable to the firms, businesses, or companies. They have to file the ITR every year, even in the event of a loss.

Return of Loss: Section 139(3)

This section says that if your intention is to adjust the future profits against the loss incurred in the current year, then you have to file an ITR. This will reduce your tax burden in the future years. But if you don't fill out the Income Tax return, then you won't be allowed to balance the loss and profit. The ITR has to be filed in the following situations:

• If the loss happens in the Capital gains of business and profession, then you have to file an ITR to carry forward the loss to the next year.
• If the loss happened in the category of House Property, then it is not important to file the ITR. This loss can be carried forward to the next year, even if you file the ITR after the due date.
• If you don't file the ITR within the due date, then it is not possible to carry forward your loss of income in the current year.
• If the loss is offset with the income of the same year, then it will be allowed even if the loss return filing is done after the due date.