Tax Consultant
1312 Points
Posted on 19 June 2026
To declare carry-forward losses in ITR-2, use Schedule CFL (Carry Forward of Loss).
Schedule CFL has two parts:
PART 1: Brought-forward losses from prior years
Enter the assessment year, type of loss, and amount. Types: house property loss, STCL (short-term capital loss), LTCL (long-term capital loss), business loss, speculative business loss.
PART 2: Current year losses going forward
After Schedule CYLA sets off current year losses, any unabsorbed balance is carried forward. The system auto-fills this from Schedule CYLA.
Key set-off rules:
- STCL (short-term capital loss): can be set off against BOTH STCG and LTCG.
- LTCL (long-term capital loss): can ONLY be set off against LTCG (not STCG).
- House property loss: can be set off against any other income head up to Rs 2 lakhs per year.
Carry-forward periods:
- Capital losses: 8 assessment years
- Business losses (non-speculation): 8 assessment years
- Speculative business losses: 4 assessment years
CRITICAL RULE: To carry forward losses, the ITR must be filed ON OR BEFORE the due date (July 31, 2026 for non-audit cases). A belated return filed after July 31 LOSES the right to carry forward most losses. House property loss is the only exception (it can be carried forward even in a belated return).
So if you have capital losses or business losses to carry forward, do not file late.
For the full Schedule CFL and CYLA walkthrough in ITR-2 for AY 2026-27 including the step-by-step form structure, this [ITR-2 guide for AY 2026-27](https://taxgarden.in/blog/itr-2-ay-2026-27-who-can-file-changes-deadline) covers the complete loss reporting and carry-forward process.