Comparison of Section 112 "Carry forward and set off of business loss." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....ars; and unabsorbed business loss takes precedence over carried forward allowances u/ss 33(11) and 45(7). Affects taxpayers carrying business losses and the Revenue. Effective date/decision date: Not stated in the document. Background & Scope Statutory hooks: Clause 112 of the Income Tax Bill, 2025 (Old Version) purports to govern "Carry forward and set off of business loss" and interacts with section 109 (set off between heads) and with sections 33(11) and 45(7) (carried forward allowances). The clause covers loss computed under the head "Profits and gains of business or profession" excluding loss from speculation business. The Bill explicitly defines "unabsorbed business loss" in sub-section (4) as the portion not, or not wholly, set of....

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....ver utilisation of specified carried-forward allowances. Exceptions/Provisos Carve-outs in the text: exclusion of losses sustained in a speculation business. No other provisos, thresholds, or exceptions are set out. Not stated in the document: any special treatment for amalgamations, demergers, change of ownership, or continuity of business conditions. Not stated in the document: any distinction between domestic and non-resident taxpayers, or treatment where a business ceases. Illustrations * Example 1: Taxpayer A has a business loss of Rs. 10 lakh in Year 1 (non-speculation). In Year 2, A earns business profits of Rs. 6 lakh. Under sub-section (1), A can set off Rs. 6 lakh of the carried forward loss against Year 2 business profit; th....

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....y set off u/s 109. The enacted Section 112 does not include this definitional sub-section; it uses the phrase "loss computed under the head 'Profits and gains of business or profession'" without labelling it "unabsorbed business loss." * Practical impact: The Bill's explicit definition provides clearer labelling and may reduce ambiguity on scope; the enacted text remains substantively similar but omits the explicit definitional label that could assist interpretation and drafting of rules or guidance. * Order and scope of set off language: The Bill states that the unabsorbed business loss "shall be carried forward to the subsequent tax year and shall be set off only against the profits and gains of business or profession, car....

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....section." * Practical impact: Both texts give set-off priority to unabsorbed business loss over specified carried-forward allowances; wording differs slightly but the allocation of priority appears unchanged in effect. * Temporal limit on carry forward: Both versions limit carry forward to "not more than eight tax years immediately succeeding the tax year" in which the loss was first computed (Bill) / "for more than eight tax years immediately succeeding" (enacted). Wording is substantively equivalent. * Practical impact: No practical change. * Minor drafting and terminology differences: The Bill uses "subsequent tax year" and "assessable for that tax year," whereas the enacted section uses "following tax year" and "carried on by hi....