Set - Off, Carry Forward and Set - Off of Business Losses:

Loss from business or investment: Section 20. (1) For the purposes of computing the income earned by any person from any business or investment in any income year, such person may deduct the loss as mentioned below: (a) Loss suffered by that person from any other business and not deducted in that year, and (b) Loss suffered by that person from any business and not deducted in the last seven income years. Provided that in the case of a project of building and operation of any public infrastructure, which is then transferred to the Government of Nepal, a project on construction of powerhouse and generation and transmission of electricity, and an entity conducting petroleum work pursuant to the Nepal Petroleum Act, 2040 (1983), loss not deducted in the last twelve income years. Example: A Pvt. Ltd. suffered Loss of Rs. 75,00,000 during FY 2072/73. This loss can be carried forward to set-off with the income of the any of the Next Seven Years, and can be carried upto FY 2078.079. (2) For the purposes of computing the income earned by any person from any investment in any income year, such person shall be allowed to deduct the loss suffered by that person from any other investment and not deducted in that year and the loss incurred by that person from such investment or any other investment which could not be deducted in the past seven years. Note: Loss on Business can be set-off against the Income from the Investment. But Loss on Investment can be set-off only against Investment Income (cannot be set-off against the business income).