Clause 117 of Income Tax Bill 2025: Tax Treatment for Losses in Bank Mergers Explained

Clause 117 of the Income Tax Bill, 2025, addresses the treatment of accumulated losses and unabsorbed depreciation in cases of amalgamation involving banking companies, corresponding new banks, or government companies. When such entities merge under a government-sanctioned scheme, their accumulated losses and unabsorbed depreciation are transferred to the amalgamated entity for tax purposes. These losses can be carried forward for up to eight tax years following the year of amalgamation. The clause defines key terms such as "accumulated loss," "banking company," "banking institution," "corresponding new bank," "general insurance business," "government company," "original predecessor entity," "strategic disinvestment," and "unabsorbed depreciation."