Skip to content

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

A company amalgamation covered by section 116(1) is effected on 1 October 2025. The amalgamating company first computed a business loss of Rs 40 lakh for tax year 2022-23 and the amalgamation is the first one for that loss. Under section 116(12) of the Income-tax Act, 2025, what is the position on carry forward in the amalgamated company?

The loss can be carried forward for not more than eight tax years immediately succeeding the year for which it was first computed for the original predecessor entity. The eight-year period is not restarted by the amalgamation, so it runs from 2022-23 here.

  1. AThe loss can be carried forward for not more than eight tax years immediately succeeding the tax year in which it was first computed for the original predecessor entityCorrect
  2. BThe loss can be carried forward for eight tax years starting from the tax year of amalgamation
  3. CThe loss can be carried forward indefinitely
  4. DThe loss can be carried forward for four years from the tax year of amalgamation

Explanation

For amalgamations effected on or after 1 April 2025, section 116(12) limits carry forward to eight tax years immediately succeeding the year in which the loss was first computed for the original predecessor entity. The clock does not restart on amalgamation, so the loss lapses after the eight years counted from 2022-23.

Did you get it right without looking?

One question tells you little. A timed set on Corporate Tax Planning shows your real accuracy, how long you take and where you lose marks.

Practise Corporate Tax PlanningFree diagnostic mock

More Corporate Tax Planning questions