We are planning an amalgamation this year and the target has losses that are already several years old. Does the eight-year clock restart in our hands?
No — not for an amalgamation or business reorganisation effected on or after 1 April 2025. Sub-section (6B) of section 72A provides that where any amalgamation or business reorganisation is effected on or after that date, any loss forming part of the accumulated loss of the predecessor entity under sub-section (1), (6) or (6A) which is deemed to be the loss of the successor entity shall be carried forward in the successor's hands for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for the original predecessor entity. "Original predecessor entity" is defined in s.72A(7)(ab) as the predecessor entity in respect of the FIRST amalgamation under sub-section (1) or the first business reorganisation under sub-section (6) or (6A). Sub-section (6B) and the definition in s.72A(7)(ab) were inserted by the Finance Act, 2025 (Act No. 7 of 2025) with effect from 1 April 2026, so the provision first governs assessment year 2026-27 — which is the first assessment year in which a reorganisation effected on or after 1 April 2025 can fall, the two dates dovetailing exactly.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2026-04-01, reported as Income-tax Act, 1961, s.72A(6B), inserted by the Finance Act, 2025 (Act No. 7 of 2025) w.e.f. 1 April 2026, as printed on the departmental Year 2026 page and, under a forthcoming-insertion note, on the Year 2025 page; absent from both Year 2024 pages. It bears on section 72A, section 72A(6B), section 72A(1), section 72A(6), section 72A(6A), section 72A(7), section 72, section 47(xiii), section 47(xiv), section 47(xiiib) of the Income Tax Act 1961, in How Tax Law Is Read, Assessment & Scrutiny and Deductions & Disallowances matters.
Before this change the deeming in s.72A(1) was widely understood to restart the s.72 eight-year clock, because the loss was deemed to be the loss of the amalgamated company "for the previous year in which the amalgamation was effected". That is exactly what sub-section (6B) now stops, and it stops it in a way that is deliberately hard to plan around: the count runs from the assessment year for which the loss was FIRST COMPUTED FOR THE ORIGINAL PREDECESSOR ENTITY, and the definition of "original predecessor entity" reaches back to the first amalgamation or reorganisation in the chain. A loss that has already been passed through one merger cannot be refreshed by passing it through a second. Three practical consequences follow. First, the age of the target's losses is now a valuation input, not a footnote: a loss first computed for AY 2019-20 is spent after AY 2027-28 in whosever hands it sits. Second, the reach is not confined to amalgamations — the sub-section applies to the accumulated loss inherited under sub-section (6) (a firm or proprietary concern succeeded by a company under s.47(xiii) or (xiv)) and under sub-section (6A) (a private or unlisted public company succeeded by a limited liability partnership under s.47(xiiib)) as well. Third, the trigger is the date the amalgamation or business reorganisation is EFFECTED, so a scheme with an appointed date on or after 1 April 2025 is inside it and the answer for a scheme effected earlier is different.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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As printed on the Year 2025 departmental page, sub-section (6B) reads: Where any amalgamation or business reorganisation, as the case may be, is effected on or after the 1st April, 2025, any loss forming part of the accumulated loss of the predecessor entity under sub-section (1), (6) or (6A), being— (a) the amalgamating company; or (b) the firm or proprietary concern; or (c) the private company or unlisted public company, as the case may be, which is deemed to be the loss of the successor entity, being— (i) the amalgamated company; or (ii) the successor company; or (iii) the successor limited liability partnership, as the case may be, shall be carried forward in the hands of the successor entity for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for original predecessor entity. Sub-section (7)(ab) on the same page defines "original predecessor entity" to mean the predecessor entity in respect of the first amalgamation under sub-section (1) or first business reorganisation under sub-section (6) or (6A). Sub-section (6) deals with a firm succeeded by a company fulfilling s.47(xiii) or a proprietary concern succeeded by a company fulfilling s.47(xiv); sub-section (6A) deals with a private company or unlisted public company succeeded by a limited liability partnership fulfilling the proviso to s.47(xiiib).
For an amalgamation or business reorganisation effected on or after 1 April 2025, the inherited accumulated loss may be carried forward in the successor entity's hands for not more than eight assessment years immediately succeeding the assessment year for which the loss was first computed for the original predecessor entity. The deeming in s.72A(1), (6) and (6A) no longer restarts the carry-forward period, and the count is traced to the first amalgamation or first business reorganisation in the chain.
Not applicable — this is a statement of statutory text taken from a departmental page. No judicial reasoning is involved.
shall be carried forward in the hands of the successor entity for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for original predecessor entity.
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Handle my notice → Ask a CA on WhatsAppNo — not for an amalgamation or business reorganisation effected on or after 1 April 2025. Sub-section (6B) of section 72A provides that where any amalgamation or business reorganisation is effected on or after that date, any loss forming part of the accumulated loss of the predecessor entity under sub-section (1), (6) or (6A) which is deemed to be the loss of the successor entity shall be carried forward in the successor's hands for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for the original predecessor entity. "Original predecessor entity" is defined in s.72A(7)(ab) as the predecessor entity in respect of the FIRST amalgamation under sub-section (1) or the first business reorganisation under sub-section (6) or (6A). Sub-section (6B) and the definition in s.72A(7)(ab) were inserted by the Finance Act, 2025 (Act No. 7 of 2025) with effect from 1 April 2026, so the provision first governs assessment year 2026-27 — which is the first assessment year in which a reorganisation effected on or after 1 April 2025 can fall, the two dates dovetailing exactly. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 72A, section 72A(6B), section 72A(1), section 72A(6), section 72A(6A), section 72A(7), section 72, section 47(xiii), section 47(xiv), section 47(xiiib) of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.72A(6B), inserted by the Finance Act, 2025 (Act No. 7 of 2025) w.e.f. 1 April 2026, as printed on the departmental Year 2026 page and, under a forthcoming-insertion note, on the Year 2025 page; absent from both Year 2024 pages. Before this change the deeming in s.72A(1) was widely understood to restart the s.72 eight-year clock, because the loss was deemed to be the loss of the amalgamated company "for the previous year in which the amalgamation was effected". That is exactly what sub-section (6B) now stops, and it stops it in a way that is deliberately hard to plan around: the count runs from the assessment year for which the loss was FIRST COMPUTED FOR THE ORIGINAL PREDECESSOR ENTITY, and the definition of "original predecessor entity" reaches back to the first amalgamation or reorganisation in the chain. A loss that has already been passed through one merger cannot be refreshed by passing it through a second. Three practical consequences follow. First, the age of the target's losses is now a valuation input, not a footnote: a loss first computed for AY 2019-20 is spent after AY 2027-28 in whosever hands it sits. Second, the reach is not confined to amalgamations — the sub-section applies to the accumulated loss inherited under sub-section (6) (a firm or proprietary concern succeeded by a company under s.47(xiii) or (xiv)) and under sub-section (6A) (a private or unlisted public company succeeded by a limited liability partnership under s.47(xiiib)) as well. Third, the trigger is the date the amalgamation or business reorganisation is EFFECTED, so a scheme with an appointed date on or after 1 April 2025 is inside it and the answer for a scheme effected earlier is different. If it applies to you, the first step is this: Fix the date on which the amalgamation or business reorganisation is effected. That date, and not the date of the scheme petition or of the sanction order, is what sub-section (6B) keys off.
As printed on the Year 2025 departmental page, sub-section (6B) reads: Where any amalgamation or business reorganisation, as the case may be, is effected on or after the 1st April, 2025, any loss forming part of the accumulated loss of the predecessor entity under sub-section (1), (6) or (6A), being— (a) the amalgamating company; or (b) the firm or proprietary concern; or (c) the private company or unlisted public company, as the case may be, which is deemed to be the loss of the successor entity, being— (i) the amalgamated company; or (ii) the successor company; or (iii) the successor limited liability partnership, as the case may be, shall be carried forward in the hands of the successor entity for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for original predecessor entity. Sub-section (7)(ab) on the same page defines "original predecessor entity" to mean the predecessor entity in respect of the first amalgamation under sub-section (1) or first business reorganisation under sub-section (6) or (6A). Sub-section (6) deals with a firm succeeded by a company fulfilling s.47(xiii) or a proprietary concern succeeded by a company fulfilling s.47(xiv); sub-section (6A) deals with a private company or unlisted public company succeeded by a limited liability partnership fulfilling the proviso to s.47(xiiib). The matter was decided on 2026-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. For an amalgamation or business reorganisation effected on or after 1 April 2025, the inherited accumulated loss may be carried forward in the successor entity's hands for not more than eight assessment years immediately succeeding the assessment year for which the loss was first computed for the original predecessor entity. The deeming in s.72A(1), (6) and (6A) no longer restarts the carry-forward period, and the count is traced to the first amalgamation or first business reorganisation in the chain.
Not applicable — this is a statement of statutory text taken from a departmental page. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "shall be carried forward in the hands of the successor entity for not more than eight assessment years immediately succeeding the assessment year for which such loss was first computed for original predecessor entity."
It was decided by the CBDT Circulars & Instructions on 2026-04-01 and is reported as Income-tax Act, 1961, s.72A(6B), inserted by the Finance Act, 2025 (Act No. 7 of 2025) w.e.f. 1 April 2026, as printed on the departmental Year 2026 page and, under a forthcoming-insertion note, on the Year 2025 page; absent from both Year 2024 pages. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 72A, section 72A(6B), section 72A(1), section 72A(6), section 72A(6A), section 72A(7), section 72, section 47(xiii), section 47(xiv), section 47(xiiib), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. For an amalgamation or business reorganisation effected on or after 1 April 2025, the inherited accumulated loss may be carried forward in the successor entity's hands for not more than eight assessment years immediately succeeding the assessment year for which the loss was first computed for the original predecessor entity. The deeming in s.72A(1), (6) and (6A) no longer restarts the carry-forward period, and the count is traced to the first amalgamation or first business reorganisation in the chain. It arises in How Tax Law Is Read, Assessment & Scrutiny and Deductions & Disallowances matters, on section 72A, section 72A(6B), section 72A(1), section 72A(6), section 72A(6A), section 72A(7), section 72, section 47(xiii), section 47(xiv), section 47(xiiib) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Fix the assessment year as well as the date of the reorganisation. Sub-section (6B) was inserted with effect from 1 April 2026 and so first applies to assessment year 2026-27; because a reorganisation effected on or after 1 April 2025 falls at the earliest in previous year 2025-26, there is no gap between the two dates and no reorganisation within the sub-section's words escapes it. For any reorganisation effected on or after 1 April 2025, obtain from the target the assessment year for which each tranche of loss was FIRST computed, and for the entity for which it was first computed — not merely the year it came into the target's hands. Trace the chain back through any earlier amalgamation or reorganisation. The definition of "original predecessor entity" in s.72A(7)(ab) points to the first amalgamation under sub-section (1) or the first business reorganisation under sub-section (6) or (6A), and a loss already passed through one merger does not get a fresh eight years. Model the losses as expiring on their original schedule when you price the transaction, and check whether any tranche will lapse before the group can absorb it. Do not carry any advice given for a pre-1 April 2025 reorganisation across to a later one. Any opinion or software setting that treats the eight-year period as restarting in the amalgamated company's hands is superseded by amendment for a reorganisation effected on or after that date. Note that sub-section (6B) is a limit on the PERIOD of carry-forward only. The conditions in sub-section (2), the clawback in sub-section (3) and the demerger apportionment in sub-section (4) all continue to apply on their own terms.
Still good law. The Year 2025 departmental page is the most recent edition of s.72A I could reach, and the sub-section is absent from the Year 2024 (No. 1), Year 2024 (No. 2) and Year 2022 pages, which brackets its arrival. The sub-section was inserted by the Finance Act, 2025 (Act No. 7 of 2025) with effect from 1 April 2026, established on verification from the forthcoming-insertion note on the Year 2025 page and from the footnote on the Year 2026 page, which agree. The consequence for practice can be stated safely: any authority, opinion or software setting that treats the eight-year carry-forward period as restarting in the successor entity's hands is superseded by amendment for an amalgamation or business reorganisation effected on or after 1 April 2025, from assessment year 2026-27 onwards. I did not locate any judicial decision on s.72A(6B); none would yet be expected. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-section (6B) was transcribed twice this pass, on two separate fetches, from https://incometaxindia.gov.in/w/section-72a-48, which printed the Act name "Income-tax Act, 1961", the heading "Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc" and the stamp "Year: 2025". Both fetches returned the same operative words. The definition of "original predecessor entity" in s.72A(7)(ab) was transcribed from the same page. THE AMENDING ACT AND COMMENCEMENT DATE WERE ESTABLISHED ON VERIFICATION, ON TWO INDEPENDENT DEPARTMENTAL ROUTES. First, the Year 2025 page at https://incometaxindia.gov.in/w/section-72a-48 prints, immediately above the text of the sub-section, the note "Following sub-section (6B) shall be inserted after sub-section (6A) of section 72A by the Finance Act, 2025, w.e.f. 1-4-2026:", with a matching note for clause (ab) of sub-section (7); that note was transcribed on two separate fetches asking different questions. Second, a Year 2026 edition of s.72A exists at https://incometaxindia.gov.in/w/section-72a-53 — Act name "Income-tax Act, 1961", the same section heading, stamp "Year: 2026" — where the sub-section is printed as operative text carrying the footnote "Ins. by Act No. 7 of 2025, w.e.f. 1-4-2026." against both the sub-section and clause (ab). The two routes cross-identify "the Finance Act, 2025" with "Act No. 7 of 2025". An earlier pass declined to adopt a volunteered statement to this effect on the ground that a 1-4-2026 commencement was inconsistent with the sub-section's own trigger of a reorganisation "effected on or after the 1st April, 2025"; that reasoning was wrong and is withdrawn. There is no inconsistency: a reorganisation effected on or after 1 April 2025 falls at the earliest in previous year 2025-26, which is assessment year 2026-27, and an amendment commencing 1 April 2026 is precisely the amendment that governs assessment year 2026-27. NOTE ON WHICH EDITION SAYS WHAT: on the Year 2025 page (6B) appears under a "shall be inserted" note, that is, as a provision not yet in force at that edition; on the Year 2026 page it appears as operative text. Note also that although the Income-tax Act, 2025 came into force on 1 April 2026 and repealed the Income-tax Act, 1961, s.536 of that Act saves the 1961 Act for every tax year beginning before 1 April 2026, so previous year 2025-26 and assessment year 2026-27 remain governed by the 1961 Act and s.72A(6B) operates on them. 'decided_on' is the commencement date of the sub-section, 1 April 2026; 'bench' and 'favours' are inapplicable. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
For an amalgamation or business reorganisation effected on or after 1 April 2025, the inherited accumulated loss may be carried forward in the successor entity's hands for not more than eight assessment years immediately succeeding the assessment year for which the loss was first computed for the original predecessor entity. The deeming in s.72A(1), (6) and (6A) no longer restarts the carry-forward period, and the count is traced to the first amalgamation or first business reorganisation in the chain.
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