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Under the Income-tax Act, 2025, for an amalgamation effected on or after 1 April 2025, how is the eight-tax-year limit measured for carrying forward the amalgamating company's accumulated business…

Question and options

Under the Income-tax Act, 2025, for an amalgamation effected on or after 1 April 2025, how is the eight-tax-year limit measured for carrying forward the amalgamating company's accumulated business loss in the hands of the amalgamated company?

  1. From the tax year in which the amalgamated company files its first return

  2. As a fresh five-year period beginning in the year of amalgamation

  3. As a fresh eight-year period beginning in the year of amalgamation

  4. From the tax year for which the original predecessor first computed the loss

Answer and explanation

Correct answer: D - From the tax year for which the original predecessor first computed the loss

Section 116(12) of the Income-tax Act, 2025 provides that, for an amalgamation effected on or after 1 April 2025, the loss deemed to be the amalgamated company's loss can be carried forward for not more than eight tax years after the year for which it was first computed for the original predecessor. The amalgamation therefore does not start a fresh eight-year or five-year period.

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