The Income Tax Act, 2025 came into effect on 1 April 2026, replacing the 1961 Act. For the set-off and carry forward of losses, the old Chapter VI (Sections 70-80) is now replaced by a more logically organised block: Sections 108-121. The structure is cleaner - each loss type gets its own dedicated section instead of being scattered across multiple provisions with cross-references.
This guide provides the complete section-by-section concordance, highlights what changed (and what did not), explains the transition rules for pre-2026 losses, and gives practitioners a ready reference for updating their templates.
Complete Concordance Table: Old Act to New Act
| Old Act Section | New Act Section | Subject | Change Status |
|---|---|---|---|
| Section 70 | Section 108 | Set off of losses under the same head (intra-head) | Renumbered - substance identical |
| Section 71 | Section 109 | Set off of losses under any other head (inter-head) | Renumbered - substance identical. Rs 2L HP cap and new regime restriction preserved. |
| Section 71B | Section 110 | Carry forward and set off of loss from house property | Renumbered - 8-year carry forward preserved. No due date requirement unchanged. |
| Section 74 | Section 111 | Carry forward and set off of loss from capital gains | Renumbered - 8 years, STCL/LTCL rules preserved. LTCL-STCG relaxation DROPPED. |
| Section 72 | Section 112 | Carry forward and set off of business loss | Renumbered - 8 years, business income only, due date required. Same substance. |
| Section 73 | Section 113 | Set off and carry forward of losses from speculation business | Renumbered - 4 years, speculative income only. Same substance. |
| Section 73A | Section 114 | Set off and carry forward of losses from specified business (35AD) | Renumbered - unlimited carry forward preserved. |
| Section 74A | Section 115 | Set off and carry forward of losses from specified activity (race horses) | Renumbered - 4 years, race horse income only. |
| Section 72A | Section 116 | Treatment of losses and depreciation in amalgamation/demerger | Renumbered - same conditions for carry forward on amalgamation. |
| Section 72A (special amalgamation) | Section 117 | Treatment in scheme of amalgamation in certain cases | Renumbered - banking/public utility company amalgamation rules preserved. |
| Section 72AB | Section 118 | Carry forward in business reorganisation of co-operative banks | Renumbered - same conditions. |
| Section 79 | Section 119 | Carry forward of losses not permissible in certain cases (change of shareholding) | Renumbered - same conditions for closely held companies. |
| Section 80 | Section 121 | Submission of return for losses - due date mandate | Renumbered - same mandate: losses not carried forward unless return filed by due date. |
| Section 32(2) | Corresponding provision | Unabsorbed depreciation - indefinite carry forward | Preserved - same rules, no time limit, no due date condition. |
For individuals managing income tax return filing for Tax Year 2026-27 onwards, all assessment orders, notices, and ITR forms will reference the new section numbers.
What Actually Changed? Section-by-Section Analysis
Section 108 (Old Section 70): Intra-Head Set-Off
Change: None substantive. The provision allowing set-off of loss from one source against income from another source under the same head is preserved. All existing exceptions (speculative vs non-speculative, LTCL vs STCG, casual income) are carried forward in the same form.
Section 109 (Old Section 71): Inter-Head Set-Off
Change: None substantive. The Rs 2 lakh cap on house property loss inter-head set-off (Section 71(3A)) is preserved. The Section 115BAC/Section 202 (new regime) restriction blocking HP loss inter-head is also preserved. Capital loss ring-fencing to capital gains only - unchanged.
Section 110 (Old Section 71B): HP Loss Carry Forward
Change: None. 8-year carry forward against HP income only. No due date condition. Available with belated return. Identical to old Section 71B.
Section 111 (Old Section 74): Capital Loss Carry Forward
Change: The original Income Tax Bill proposed a one-time relaxation under Section 536(n) allowing brought-forward LTCL to adjust against STCG. This was dropped in the final Act. The enacted Section 111 preserves the standard Section 74 rules: STCL against STCG+LTCG, LTCL against LTCG only. 8 years, due date filing required. For capital loss rules, refer to ITR for capital gains.
Section 112 (Old Section 72): Business Loss Carry Forward
Change: None substantive. 8-year carry forward against business income only. Due date filing required under Section 121 (new Section 80). Same provisions for succession under Section 47(xiii)/(xiv). For business loss filing, refer to ITR for business.
Section 113 (Old Section 73): Speculative Loss
Change: None. 4-year carry forward against speculative income only. Section 43(5) definition of speculative transaction unchanged. Deemed speculation for companies preserved.
Section 114 (Old Section 73A): Specified Business Loss
Change: None. Unlimited carry forward against specified business income (Section 35AD businesses).
Section 121 (Old Section 80): Due Date Filing Mandate
Change: None. The mandate that business, capital, speculative, and specified business losses can only be carried forward if the return is filed by the due date is preserved. House property loss and unabsorbed depreciation exceptions are also preserved.
The DROPPED One-Time LTCL Relaxation
This is the single most significant change that did not make it into the final Act:
What was proposed: The original Income Tax Bill's Section 536(n) (repeal and savings) provided that brought-forward LTCL from pre-April 2026 could be set off against "income under the head Capital gains" without distinguishing between STCG and LTCG. This would have allowed LTCL to adjust against STCG - a one-time transition benefit.
What happened: The Select Committee and subsequent parliamentary process modified Section 536(2)(n) to require that brought-forward capital losses be set off "in the manner provided" under the repealed Section 74. This means: LTCL only against LTCG, STCL against STCG+LTCG - exactly as before.
Impact: Investors who planned to set off accumulated LTCL against future STCG under the new Act must revert to standard planning. The restrictive rule continues for all capital losses - pre-2026 and post-2026.
Transition Rules: How Pre-2026 Losses Are Treated
| Pre-2026 Loss Type | Preserved? | Set Off Rules Under New Act | Governing Provision |
|---|---|---|---|
| House property loss | Yes | Per old Section 71B - 8 years, HP income only | Section 536(2) of ITA 2025 |
| Non-speculative business loss | Yes | Per old Section 72 - 8 years, business income only | Section 536(2) |
| Speculative business loss | Yes | Per old Section 73 - 4 years, speculative income only | Section 536(2) |
| Capital losses (STCL/LTCL) | Yes | Per old Section 74 - standard STCL/LTCL rules, NOT the dropped relaxation | Section 536(2)(n) - as amended |
| Specified business loss | Yes | Per old Section 73A - unlimited, specified business only | Section 536(2) |
| Unabsorbed depreciation | Yes | Per old Section 32(2) - indefinite, any head except salary | Section 536(2) |
| Race horse loss | Yes | Per old Section 74A - 4 years, race horse income only | Section 536(2) |
Key principle: Section 536 of ITA 2025 preserves the original character of all pre-2026 losses. They are not reclassified under the new Act. Set-off follows old Act rules. Only the computational framework of the new Act applies going forward. Professional tax planning services should maintain dual-section tracking during the transition period.
When to Use Which Section Numbers
| Scenario | Use Old Section Numbers? | Use New Section Numbers? |
|---|---|---|
| ITR filing for FY 2025-26 (AY 2026-27) | Yes - old Act governs | No |
| Assessment/reassessment for FY 2025-26 and prior | Yes | No |
| Pending appeals for prior year orders | Yes | No |
| ITR filing for Tax Year 2026-27 (from April 2026) | No | Yes - new Act governs |
| Notices and assessment orders for TY 2026-27 | No | Yes |
| Advisory opinions and tax planning memos from April 2026 | Reference both during transition | Yes for forward-looking advice |
| Schedule CFL for carried-forward pre-2026 losses | Old section in origin column | New section for current year computation |
Ensure TDS return filing references are updated to new section numbers for Tax Year 2026-27 TDS certificates and returns.
What Practitioners Should Do Now
- Update all ITR preparation templates and checklists to reference Sections 108-121 instead of 70-80 for Tax Year 2026-27
- Maintain a dual-section reference sheet during the transition period - many clients will have both pre-2026 losses (old sections) and new losses (new sections) running simultaneously in Schedule CFL
- Update advisory and opinion templates - section citations in notices, replies, and professional opinions must use the correct Act
- Brief clients on the dropped LTCL-STCG relaxation - any investment strategy built around this must be revised
- Monitor CBDT notifications and IT Rules 2026 for any changes to loss computation or carry forward mechanics under the new Act
- Track carried-forward pre-2026 losses separately - they follow old Act rules even though they appear in new Act ITR forms
Key Takeaways
The Income Tax Act, 2025 replaces Sections 70-80 with Sections 108-121. The set-off and carry forward framework is preserved intact - this is largely a renumbering and reorganisation exercise, not a substantive policy change.
Each loss type now has its own dedicated section (110 for HP, 111 for capital, 112 for business, 113 for speculative, 114 for specified, 115 for race horses) - cleaner than the old Act where provisions were spread across multiple sections with cross-references.
The ONE significant change that was proposed but DROPPED: Section 536(n) one-time LTCL-STCG relaxation. The final Act maintains the standard restrictive rule: LTCL only against LTCG.
Pre-2026 losses are preserved under Section 536 (repeal and savings). Character and set-off rules follow the old Act. They are not reclassified under the new Act.
The due date filing mandate continues under Section 121 (old Section 80). House property loss and unabsorbed depreciation remain the only exceptions that survive late filing.
Need Help with Income Tax Return Filing?
Navigating the transition from the 1961 Act to the 2025 Act requires dual-section tracking, understanding which Act governs which year, and correctly managing carried-forward losses across both regimes. Professional CA assistance ensures accurate compliance.
Explore our income tax return filing and tax planning services for transition-ready support.
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