Section 113 - Set off and carry forward of losses computed in respect of speculation business
A speculation-business loss is a separate four-year bucket. It can be used only against profit of another speculation business. The provision also contains a company deeming rule for share transactions. Section 113(6) switches that deeming rule off in either of two cases: (a) the company’s gross total income consists mainly of income under “Income from house property”, “Capital gains” or “Income from other sources”; or (b) its principal business is any one of three independent alternatives—trading in shares, banking, or granting loans and advances.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current-law control
This page uses the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026. Earlier years and saved proceedings remain subject to the repeal-and-savings framework.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
A speculation-business loss is a separate four-year bucket. It can be used only against profit of another speculation business. The provision also contains a company deeming rule for share transactions. Section 113(6) switches that deeming rule off in either of two cases: (a) the company’s gross total income consists mainly of income under “Income from house property”, “Capital gains” or “Income from other sources”; or (b) its principal business is any one of three independent alternatives—trading in shares, banking, or granting loans and advances.
Who should use this section
Taxpayers with current-year or carried-forward losses under the relevant head or specified activity This applicability note is specific to section 113.
Old-law bridge
1961 Act section 73
The bridge is navigational only. A 1961 Act case or rule is carried forward only after checking wording, transition provisions and the current 2025 Act text.
Professional alert
Exception / professional alert Classify the activity before applying the loss rule. Delivery, derivatives, hedging and company-share deeming issues may be governed by other definitions and provisions.
Connected Income-tax Rules, 2026 and Forms
No provision-specific Rule/Form is independently mapped in this tranche. General return, procedure and evidence rules can still apply.
Worked application
A company incurs ₹9 lakh speculation loss in tax year 2026-27 and earns ₹4 lakh speculation profit in 2028-29. The company can use ₹4 lakh and continue ₹5 lakh, provided the four-year period and return condition are satisfied.
Evidence / compliance checklist
- Build a section 113 loss ledger showing source, head, tax year of origin, amount used and balance carried forward.
- Preserve the timely return and assessment/intimation that determines the loss where the statute makes filing a condition (section 113: Set off and carry forward of losses computed in respect of speculation business).
- For reorganisations, retain scheme orders, ownership continuity, asset/business continuity and predecessor-successor tax records (section 113: Set off and carry forward of losses computed in respect of speculation business).
- Prevent double use by reconciling the carry-forward schedule to each later return before set-off (section 113: Set off and carry forward of losses computed in respect of speculation business).
Common mistake
Using a single “loss carried forward” figure for section 113 without preserving head/source restrictions, filing conditions and the remaining statutory period.
Recommended approach
For section 113, fix the governing tax year, identify the operative sub-section for “Set off and carry forward of losses computed in respect of speculation business”, trace every amount to evidence, apply only verified Rule/Form links, and retain a computation that another reviewer can reproduce from the primary source.
Thresholds, periods and timing checkpoints
- (2) Where for any tax year, loss computed in respect of a speculation business cannot
- loss, as the case may be, shall be carried forward to the following tax year and—
- carried on by him for such tax year; and
- shall be carried forward to the following tax year and so on.
- (3) No loss shall be carried forward under this section for more than four tax years
- immediately succeeding the tax year for which the loss was first computed.
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 113 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 113 merely because the subject is similar.
Related provisions
- Section 33
- Section 112
- Section 114
Current statutory text
Primary-source trail
FAQs
What does section 113 of the Income-tax Act, 2025 cover?
Section 113 covers set off and carry forward of losses computed in respect of speculation business. The operative result depends on the exact statutory conditions shown on this page and applies from 1 April 2026, subject to transition/savings provisions.
Who should check section 113?
Taxpayers with current-year or carried-forward losses under the relevant head or specified activity This applicability note is specific to section 113.
Are there specific Rules or Forms for section 113?
No provision-specific Rule/Form independently mapped in this tranche.