here are five heads of income -salary,house property ,business ,capital gains and other sources. Out of these heads, losses may be incurred in any head except Salary. The question is , whether any loss incurred in any head other than Salary be adjusted with the Salary income?

The provision regarding adjustment of losses incurred in a year within different heads are given in section 71 of the I T Act. It provides that following losses only can be adjusted with salary

1. loss from house property
2. loss from other sources if any.

Business loss was , previously be allowed to be adjusted with Salary income but it was so much mis-utilised that from Assessment year 2005-06, the adjustment was withdrawn by insertion of sub-section 2A under section 71 which reads as under

(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss and the assessee has income assessable under the head Salaries, the assessee shall not be entitled to have such loss set off against such income.

Similarly ,capital loss -whether short term or long term- is not allowed to be adjusted with other head of income.

(3) Where in respect of any assessment year, the net result of the computation under the head Capital gains is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.

So , if you have loss under house property income and in other sources, should you tell to your employer so that lower tax on salary is deducted ?

Yes, there is express provision u/s 192(2B) of the I T Act which states that such information should be given to employer in plain paper . The provision is given below

192(2B) Where an assessee who receives any income chargeable under the head Salaries has, in addition, any income chargeable under any other head of income (not being a loss under any such head other than the loss under the head Income from house property) for the same financial year, he may send to the person responsible for making the payment referred to in sub-section (1) the particulars of

• (a) such other income and of any tax deducted thereon under any other provision of this Chapter;
• (b) the loss, if any, under the head Income from house property,

in such form and verified in such manner as may be prescribed, and thereupon the person responsible as aforesaid shall take

• (i) such other income and tax, if any, deducted thereon; and
• (ii) the loss, if any, under the head Income from house property,

also into account for the purposes of making the deduction under sub- section (1) :

Rule 26 B prescribes the rule and form of verification in following words

 26B. (1) The assessee may send to the person responsible for making payment under sub-section (1) of section 192, a statement of any income chargeable under any head of income other than â��Salariesâ�� (not being a loss under any such head other than the loss under the head â��Income from house propertyâ��), received by the assessee for the same financial year, and of any tax deducted on such income.

(2) A verification in the following form shall be annexed to the statement referred to in sub-rule (1),â��

Form of verification

I, .......................(name of the assessee), do declare that what is stated above is true to the best of my information and belief.

Therefore, what you should do is to prepare the estimated total income by computing salary income and  any loss from house property and in the end verify it by writing form of verification as stated above.