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Limitations on set off and carry forward of losses
(3) In case of association of persons any loss shall be set off or carried forward and set off only against the income of the association.
(4) Nothing contained in section 56, 57, 58 or 59 shall entitle —
(a) any member of an association of persons to set off any loss sustained by such association of persons, as the case may be, or have it carried forward and set off, against his income; or (b) any person who has succeeded, in such capacity, any other person carrying on any business or profession, otherwise than by inheritance, to carry forward and set off against his income, any loss sustained by such other person. (5)Subject to sub-section (4) of section 57, sub-section (12) of section 22 and sub-section (6), where in computing the taxable income for any tax year, full effect cannot be given to the loss relating to deductions under section 22, 23, 24 or 25 owing to there being no profits or gains chargeable for that year or such profits or gains as mentioned in sub-section (4) of section 57, being less than the said loss, the loss or part of the loss, as the case may be, shall be set off against fifty percent of the person’s income chargeable under the head income from business for the following year or if there is no income from business for that year, be set off against fifty percent of the person’s income chargeable under the head income from business for the next following year and soon for succeeding years.
(6) Where, under sub-section (5), deduction is also to be carried forward, effect shall first be given to the provisions of section 56 and sub-section (2) of section 58.
(7) Notwithstanding anything contained in this Ordinance, no loss which has not been assessed or determined in pursuance of an order made under section 59, 59A, 62, 63 or 65 of the repealed Ordinance or an order made or treated as made under section 120, 121 or 122 shall be carried forward and set off under section 57, sub-section (2)of section 58 or section 59.
(4) Nothing contained in section 56, 57, 58 or 59 shall entitle —
(a) any member of an association of persons to set off any loss sustained by such association of persons, as the case may be, or have it carried forward and set off, against his income; or (b) any person who has succeeded, in such capacity, any other person carrying on any business or profession, otherwise than by inheritance, to carry forward and set off against his income, any loss sustained by such other person. (5)Subject to sub-section (4) of section 57, sub-section (12) of section 22 and sub-section (6), where in computing the taxable income for any tax year, full effect cannot be given to the loss relating to deductions under section 22, 23, 24 or 25 owing to there being no profits or gains chargeable for that year or such profits or gains as mentioned in sub-section (4) of section 57, being less than the said loss, the loss or part of the loss, as the case may be, shall be set off against fifty percent of the person’s income chargeable under the head income from business for the following year or if there is no income from business for that year, be set off against fifty percent of the person’s income chargeable under the head income from business for the next following year and soon for succeeding years.
(6) Where, under sub-section (5), deduction is also to be carried forward, effect shall first be given to the provisions of section 56 and sub-section (2) of section 58.
(7) Notwithstanding anything contained in this Ordinance, no loss which has not been assessed or determined in pursuance of an order made under section 59, 59A, 62, 63 or 65 of the repealed Ordinance or an order made or treated as made under section 120, 121 or 122 shall be carried forward and set off under section 57, sub-section (2)of section 58 or section 59.
Amendment history (10)
- Added by the Finance Act, 2003.
- Sub-section (1) omitted by the Finance Act, 2012. The omitted sub-section (1)
- Sub-section (2) omitted by the Finance Act, 2012. The omitted sub-section (2)
- any loss for such association” substituted by the Finance Act, 2012.
- omitted by the Finance Act, 2012.
- Sub section (5) substituted by the finance Act 2018,the substituted sub section (5) is
- Inserted by the Finance Act, 2007.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the word “Board” by the Finance Act. 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 113
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.