Chapter VII of the Income-tax Act, 2025 runs from section 108 to section 121 and covers set off and carry forward of losses. Its 14 sections replace 15 sections of the Income-tax Act, 1961. This guide gives the complete section-by-section mapping between the two Acts.
What Chapter VII covers
Chapter VII covers set off and carry forward of losses — within a head, across heads, and forward into later years, including what happens on amalgamation, demerger and change in shareholding.
Chapter VII contains 14 sections (sections 108 to 121). Between them they carry forward the substance of 15 sections of the Income-tax Act, 1961.
The Income-tax Act, 2025 received Presidential assent on 21 August 2025 and takes effect from 1 April 2026. The Income-tax Act, 1961 continues to govern every tax year up to 31 March 2026, and all assessments, appeals, penalties and prosecutions relating to those years are completed under the old Act by virtue of the repeal and savings provision in section 536. The mapping on this page is drawn from the section-wise concordance published with the Act, including the corrigenda notified in the Gazette on 3 September 2025.
What changed in Chapter VII
- Section 119 merges sections 78 and 79, so the closely held company shareholding test and the firm succession restriction are read together.
- Capital loss carry forward moves to section 111 (old section 74) and business loss to section 112 (old section 72).
- Section 121 carries section 80 — the rule that a loss must be returned in time to be carried forward. This remains the single most common reason carried-forward losses are lost.
- Section 120 carries section 79A: no set off of losses against undisclosed income found in search, requisition or survey.
Chapter VII: complete section mapping (2025 → 1961)
Every section of Chapter VII is listed below with the section or sections of the Income-tax Act, 1961 that it corresponds to. Where a section is marked as read with a Schedule, the operative detail sits in that Schedule rather than in the section itself.
| New section (2025) | Provision | Corresponding 1961 section(s) |
|---|---|---|
| 108 | Set off of losses under same head of income | 70 |
| 109 | Set off of losses under any other head of income | 71 |
| 110 | Carry forward and set off of loss from house property | 71B |
| 111 | Carry forward and set off of loss from Capital gains | 74 |
| 112 | Carry forward and set off of business loss | 72 |
| 113 | Set off and carry forward of losses computed in respect of speculation business | 73 |
| 114 | Set off and carry forward of losses computed in respect of specified business | 73A |
| 115 | Set off and carry forward of losses from specified activity | 74A |
| 116 | Treatment of accumulated losses and unabsorbed depreciation in amalgamation or demerger, etc | 72A |
| 117 | Treatment of accumulated losses and unabsorbed depreciation in scheme of amalgamation in certain cases | 72AA |
| 118 | Carry forward and set off of losses and unabsorbed depreciation in business reorganisation of co- operative banks | 72AB |
| 119 | Carry forward and set off of losses not permissible in certain cases | 78, 79 |
| 120 | No set off of losses against undisclosed income consequent to search, requisition and survey | 79A |
| 121 | Submission of return for losses | 80 |
How to use this mapping
- Working on a year up to 2025-26? Use the 1961 section in the right-hand column. The old Act governs those years under section 536.
- Working on tax year 2026-27 onwards? Use the new section number in the left-hand column, and read the section text rather than assuming the old provision was copied verbatim.
- Drafting a reply or an appeal? Cite the section that applies to the year in dispute, not the section in force when you are writing.
- Updating templates and software? Sections that merged — shown where one new section maps to several old ones — need the most attention, because a single new provision now carries what were separate conditions.
This page is a structural mapping guide, not tax advice. A corresponding section is not always an identical section — several provisions were merged, split or re-worded when they were carried over. Always read the actual text of the new section before relying on it, and check for later amendments, rules and CBDT notifications.