The Statutory Brief

IT Act 1961 → 2025 / Section 72A

Losses

Section 72A → Section 116

Carry forward of losses on amalgamation or demerger

Section 72A of the old Income-tax Act, 1961 · new section 116 under the Income-tax Act, 2025

New reference Section 116

Income-tax Act, 1961Section 72A

  • Accumulated loss and unabsorbed depreciation of amalgamating company deemed loss of amalgamated company
  • Only for industrial undertakings, ships, hotels, banks, PSUs
  • Conditions: 3 years of business, 75% assets held for 2 years, continue business 5 years
  • Demerger: losses of transferred undertaking move to resulting company

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 116

  • Section 116: same scheme
  • Eligible: industrial undertaking/ship/hotel, banking company with specified bank, PSU mergers, strategic disinvestment cases
  • Same holding and continuation conditions
  • 117, 118: bank and co-operative bank reorganisations

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered. For amalgamations and reorganisations on or after 1 April 2025, carried-forward losses of the predecessor can be set off only for the remaining part of eight tax years from the year the loss was first computed (section 116(12)).

Practice notes

  • Service companies (other than hotels) still cannot carry forward losses on amalgamation.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is section 72A in the new Income Tax Act?

Section 116 of the Income-tax Act, 2025.

What changed in section 72A under the new Income Tax Act?

Renumbered. For amalgamations and reorganisations on or after 1 April 2025, carried-forward losses of the predecessor can be set off only for the remaining part of eight tax years from the year the loss was first computed (section 116(12)).

Is section 72A still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 72A of the 1961 Act. Section 116 of the 2025 Act applies from tax year 2026-27.

Related sections

72→112Carry forward and set-off of business losses79→119Losses lapse on change in shareholding of closely held companies72A–79A→114–120Losses on amalgamation/demerger (72A), banks (72AA), specified business (73A), change in shareholding (79), no set-off against search income (79A)