Income Tax Bill 2025: Clause 116 on Carry Forward of Losses in Business Amalgamations and Reorganizations Explained

Clause 116 of the Income Tax Bill, 2025, addresses the treatment of accumulated losses and unabsorbed depreciation during business amalgamations, demergers, and reorganizations. It allows these losses and depreciation to be carried forward and set off by the successor entity under specified conditions. These conditions include continuous business operation and asset retention for defined periods. Non-compliance results in the losses being taxed as income. The provision applies to various entities, including companies, public sector entities, and limited liability partnerships, and sets an eight-year limit for carrying forward such losses post-amalgamation or reorganization.