Condition for carry forward and set off of losses in cases of strategic restructuring : Clause 119 of the Income Tax Bill, 2025 and Comparison with Section 79 of the Income Tax Act, 1961

Carry-forward restrictions on losses after ownership or constitution changes limit tax benefits from strategic restructuring.

Clause 119 restricts carry forward and set off of losses after changes in firm constitution, business succession by non-inheritance successors, and corporate shareholding changes unless continuity of beneficial voting power is maintained. It permits an exception for start-ups where all original shareholders retain their shares and losses occurred within the first ten years, and enumerates exceptions (death, gifts to relatives, specified amalgamations/demergers, approved insolvency resolution plans) while defining terms relevant for application.