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nism-series-xa-section-71-3a-house-property-loss-set-off[ INVESTMENT ADVISER (LEVEL 1) ]

Under Section 71(3A) of the Income Tax Act, what is the maximum amount of 'Loss from House Property' (arising from housing loan interest) that can be set off against other income heads (e.g., Salary) in a single financial year?

[ A ]Maximum ₹2,00,000 (₹2 Lakhs) in a financial year; any unabsorbed loss can be carried forward for up to 8 assessment years to be set off against House Property income only.[ CORRECT ]
[ B ]Unlimited set-off against salary income with zero monetary cap.
[ C ]Maximum ₹50,00,000 per financial year.
[ D ]Loss from house property cannot be set off against any income.
Takeaway

Under Section 71(3A), a maximum of ₹2,00,000 of house-property loss (from home loan interest) can be set off against other income heads like salary in a single year, with any excess carried forward for up to 8 assessment years.

Derivation
Before the Finance Act 2017 amendment, taxpayers could set off unlimited house-property losses against salary income, which was seen as an aggressive tax-shelter strategy for high-value borrowed properties. The amendment capped intra-year set-off against other income heads at ₹2 lakh; any interest loss beyond that ceiling in a given year cannot be adjusted against salary or other income that year but is not lost — it can be carried forward for up to 8 subsequent assessment years and set off only against future house-property income. This ₹2-lakh cap plus 8-year carry-forward rule is a frequently tested numeric detail in the debt/tax-planning portion of the syllabus.
Why the others fail
B — Unlimited set-off against salary income with zero monetary cap.
Unlimited set-off against salary income was the pre-2017 rule; the Finance Act 2017 amendment introduced the current ₹2 lakh annual ceiling on intra-year set-off, removing the unlimited option.
C — Maximum ₹50,00,000 per financial year.
₹50,00,000 vastly exceeds the actual statutory ceiling — the correct annual set-off limit against other income heads under Section 71(3A) is ₹2,00,000, not ₹50 lakh.
D — Loss from house property cannot be set off against any income.
Set-off up to ₹2 lakh per year is explicitly permitted, with any unabsorbed excess carried forward for 8 years against future house-property income — a complete prohibition is incorrect.