Comparison of Section 113 "Set off and carry forward of losses computed in respect of speculation" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....from speculation business and provides a four-year carry-forward limit, affecting taxpayers engaged in speculative trading (including certain companies trading in shares). Effective date or decision date: Not stated in the document. Background & Scope Statutory hooks: Clause 113 of the Income Tax Bill, 2025 (Old Version). The provision addresses the treatment of "speculation business" losses for set-off and carry-forward purposes. Definitions and explanatory notes within the text: sub-section (5)(a) contains a deeming provision for companies engaged in purchase and sale of shares of other companies; sub-section (5)(b) defines "unabsorbed speculation business loss." Coverage: applies to losses computed in respect of a speculation business....

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....ing loans/advances. Interpretation The clause expresses a clear legislative intent to ring-fence speculation business losses: they are to be absorbed only against similar profits and are not available for general set-off against other heads of income. The temporal limitation of four years indicates a policy choice to provide limited relief while preventing indefinite carry-forward of speculative losses. The explicit priority rule in sub-sec (4) manifests an interpretive principle that unabsorbed speculation losses should be exhausted before other carried-forward allowances related to speculation business. Exceptions/Provisos Carve-outs are confined to the deeming provision in sub-sec (5)(a). Where a company's gross total income main....

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.... of a speculation business" while the Bill (Clause 113, Old Version) consistently uses "unabsorbed speculation business loss" and defines that term in sub-section (5)(b). * Practical impact: The Bill's express definition clarifies the concept of unabsorbed loss for drafting and interpretation; the Act version omits that explicit definition, which may lead to reliance on ordinary meaning or other provisions for interpretive clarity. * Sequence and phrasing of carry-forward rule: The Act sets out (1) set-off only against other speculation business profits; (2) carry-forward where loss cannot be wholly set off, with iterative application; (3) four-year limitation. The Bill states these same rules but frames sub-section (2) as carrying ....

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....l material under one sub-section, improving textual structure and user comprehension. * Non-application exceptions: Both texts contain identical carve-outs in sub-sec (6) exempting the deeming rule for companies whose gross total income consists mainly of certain heads or whose principal business is trading in shares/banking/loaning. * Practical impact: No substantive change here. * Stylistic and drafting differences: The Bill uses the phrase "during any tax year" and "for the said tax year" in sub-sec (1), and more repetitive phrasing in sub-sec (2). The Act is more succinct. * Practical impact: Drafting style changes in the Bill provide marginally more explicit temporal markers and an express definitional provision, aiding textual....