Under the Income Tax Act, if a business loss of ₹5,00,000 (non-speculative) and a speculation loss of ₹2,00,000 are incurred in the same year, and the total profit from other heads is ₹3,00,000, what is the maximum loss that can be carried forward? MCQ with Answer and Explanation

Under the Income Tax Act, if a business loss of ₹5,00,000 (non-speculative) and a speculation loss of ₹2,00,000 are incurred in the same year, and the total profit from other heads is ₹3,00,000, what is the maximum loss that can be carried forward?
A. ₹7,00,000
B. ₹2,00,000
C. ₹5,00,000
D. ₹4,00,000
Answer: Option D
Solution (By JKSSB Mock Tests)
Non-speculative business loss can be set off against any other head (up to ₹3,00,000), leaving ₹2,00,000 to carry forward. Speculation loss can only be set off against speculation profit (₹0 here), so the full ₹2,00,000 carries forward. Total carry forward = ₹2,00,000 + ₹2,00,000 = ₹4,00,000.

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Practice More Accountancy and Book Keeping Questions

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Correct Answer: Option D


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Question #2
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Correct Answer: Option C


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Advance ruling helps businesses determine GST implications before undertaking a transaction.

Question #3
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B. Standard Cost - Actual Cost
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Correct Answer: Option C


Explanation:
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