Section 79 → Section 119

Losses lapse on change in shareholding of closely held companies

Section 79 of the old Income-tax Act, 1961 · new section 119 under the Income-tax Act, 2025

New reference Section 119

Income-tax Act, 1961Section 79

Losses carried forward only if 51% voting power is held by the same persons on the last day of the loss year and the current year
Eligible start-ups: allowed if original shareholders continue, within 10 years of incorporation
Not for widely held companies
78: change in constitution of firm

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

Income-tax Act, 2025Section 119

Section 119(3)(a): same 51% continuity test
119(3)(b): eligible start-ups under section 140
119(1), (2): firms and succession (old 78)
Unabsorbed depreciation is outside this restriction

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

What changed

Renumbered; sections 78 and 79 combined into 119.

Practice notes

Check the exceptions carried over from old 79(2) (e.g. IBC resolution plans) in section 119 before applying.

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 79 in the new Income Tax Act?

Section 119(3) of the Income-tax Act, 2025: the 51% shareholding continuity test for carry forward of losses.

What changed in section 79 under the new Income Tax Act?

Renumbered; sections 78 and 79 combined into 119.

Is section 79 still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 79 of the 1961 Act. Section 119 of the 2025 Act applies from tax year 2026-27.

Related sections

72→112Carry forward and set-off of business losses 72A→116Carry forward of losses on amalgamation or demerger 80-IAC→140100% profit deduction for eligible start-ups for 3 out of 10 years