Section 115 - Set off and carry forward of losses from specified activity
This section governs the activity of owning and maintaining race horses. The loss is restricted to income from the same specified activity and can be carried for four tax years. The provision defines horse race, stake money, loss, race horses and the specified activity.
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
This section governs the activity of owning and maintaining race horses. The loss is restricted to income from the same specified activity and can be carried for four tax years. The provision defines horse race, stake money, loss, race horses and the specified activity.
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 115.
Old-law bridge
1961 Act section 74A
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 Betting winnings of a person who does not own and maintain race horses are not automatically this section's specified activity.
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
An owner incurs eligible loss of ₹5 lakh from maintaining race horses and earns ₹2 lakh stake-money income from that activity two years later. ₹2 lakh may be set off and ₹3 lakh may continue if still within the four-year period.
Evidence / compliance checklist
- Build a section 115 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 115: Set off and carry forward of losses from specified activity).
- For reorganisations, retain scheme orders, ownership continuity, asset/business continuity and predecessor-successor tax records (section 115: Set off and carry forward of losses from specified activity).
- Prevent double use by reconciling the carry-forward schedule to each later return before set-off (section 115: Set off and carry forward of losses from specified activity).
Common mistake
Using a single “loss carried forward” figure for section 115 without preserving head/source restrictions, filing conditions and the remaining statutory period.
Recommended approach
For section 115, fix the governing tax year, identify the operative sub-section for “Set off and carry forward of losses from specified activity”, 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
- 115. (1) Any loss incurred by the assessee in specified activity in any tax year shall
- (2) Where for any tax year, loss computed in respect of a specified activity cannot be
- loss, as the case may be, shall be carried forward to the following tax year and—
- 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 115 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 115 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 115 of the Income-tax Act, 2025 cover?
Section 115 covers set off and carry forward of losses from specified activity. 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 115?
Taxpayers with current-year or carried-forward losses under the relevant head or specified activity This applicability note is specific to section 115.
Are there specific Rules or Forms for section 115?
No provision-specific Rule/Form independently mapped in this tranche.