1. Losses can generally be set off against income from the same source in the current or future years (intra-head adjustment) or against other sources in the current year (inter-head adjustment). 2. Certain losses like speculation losses can only be set off against the same type of income. Capital losses can only be carried forward. 3. Unabsorbed losses are carried forward for different periods depending on the income source - usually 4-8 years. Proper returns must be filed to carry losses forward.