Last year loss adjustements

Hello,
Last financial year, I started my shop and had a net loss of 1.8 lakhs (due to initial investments). I declared that loss in Form 4 while filing IT returns.
This financial year, I have net profit of 2.10 Lakhs from the same shop. After adjusting against last year carry forward loss (1.8L), the net profit comes to Rs. 30,000 only, which means I dont have to pay any taxes this year (as this 30K is below 2L limit).

However, I am confused about what is the correct method for adjustment:

Case 1) Since this year, only 10,000 Rs. (above 2lakh tax free income slab) is my net taxable income. Should my last year loss of Rs. 1.8 Lakh be adjusted to Rs. 1.7 Lakh? (I will then declare this 1.7 as carry forward loss to next years)
OR
Case 2) 2.1 Lakh Profit this year minus 1.8 Lakh loss last year means simple 30K profit net. So all my carry forward losses ends here and I cannot carry forward anything to next years. 

My doubt arises because 2 L Rs. is already exempted - shouldn't I get the benefit of this exemption?

Will appreciate your valuable inputs.

Replies (2)

CY Profit Rs. 210,000 - Business Loss of Previous Year Rs. 180,000; so CY taxable income will be RS. 30,000.

you current year income will be 30000. and of course you are getting the benefit of limit of 2lakhs since your income of 30000 is below 2lakhs you dont need to pay tax. there is no such prov. where you first exempt you income of 2lakhs and then adjust losses.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
08 October 2026
Accounts and Tax Associate

POOJA R TELI & CO

Pune

CA Inter

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details
Company
30 September 2026
Senior Accounts Executive

Codeboard Technology

Chennai

MBA

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
ARTICLESHIP 07 October 2026
Article Trainee/ CMA Trainee

RMA And Associates LLP

New Delhi

CA Inter

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details
Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
16 October 2026
CA article trainee

Zerdi & Co. Chartered Accountants

Pune

CA Inter

View Details