Section 112 — Carry Forward Business Loss | ITA 2025

Section 112 — CARRY FORWARD OF NON-SPECULATION BUSINESS LOSS (1961 s. 72 SUCCESSOR)

Section 112 is the substantive equivalent of 1961 s. 72. Where non-speculation, non-specified-business PGBP-loss cannot be set off intra-head (s. 108) or inter-head (s. 109), the balance is carried forward up to EIGHT subsequent tax years. Carry-forward set off ONLY against PGBP income (no inter-head in carry-forward years, except limited HP-loss exception). Timely-filing of return per s. 263 mandatory.

Statutory text — Income-tax Act, 2025

Marginal note — Carry forward and set off of business loss

(1) Where for any tax year, loss computed under the head “Profits and gains of business or profession” (not being a loss sustained in a speculation business) cannot be wholly set off against the income under any other head as per section 109, so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—

(i) be set off against the profits and gains, if any, of any business or profes- sion carried on by him for that tax year; and

(ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.

(2) No loss shall be carried forward under this section for more than eight tax years immediately succeeding the tax year for which the loss was first computed.

(3) Where any allowance of part thereof under section 33(11) or 45(7) is to be carried forward, effect shall first be given to the provision of this section. Set off and carry forward of losses computed in respect of speculation business.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 112	INCOME-TAX ACT, 1961 — s. 72
8-year carry-forward of PGBP-loss	1961 s. 72(2)
Carry-forward set off only against PGBP	1961 s. 72(1)
Timely-filing requirement	1961 s. 80 read with s. 139(3)
Continuity-of-business-test removed (FA 1999)	1961 s. 72 — no continuity test post FA 1999

PLANNING NOTES

(i) PGBP loss carry-forward is the most-utilised provision in business taxation. (ii) Timely-filing of original return mandatory — loss-carry-forward not available on belated returns (s. 263(2) successor of s. 139(3)). (iii) Unabsorbed depreciation has SEPARATE rules under s. 33 (1961 s. 32(2)) — no 8-year limit, available against any-head, so carry forward indefinitely. (iv) For closely-held companies, beneficial-ownership-continuity (51% test) under s. 117 (1961 s. 79 equivalent) — change in shareholding > 51% may forfeit carry-forward. (v) For amalgamation / demerger, s. 117 governs continuation; s. 112 carry-forward survives subject to s. 117 conditions.

CROSS-REFERENCES

Section 108 / 109 — Set-off provisions.
Section 113 — Speculation-loss (separate compartment).
Section 114 — Specified-business-loss.
Section 117 — Beneficial-ownership-continuity.
Section 33(2) — Unabsorbed depreciation.

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