Section 79 → Section 99
Carry forward and set off of losses in case of certain companies
Quick Answer
Section 79 of the Income Tax Act, 1961 (Carry forward and set off of losses in case of certain companies) corresponds to Section 99 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 79
Under the Income Tax Act, 1961, Section 79 governs carry forward and set off of losses in case of certain companies. Closely held companies cannot carry forward losses if there is a change in shareholding of more than 49% (i.e., less than 51% original voting power remains).
From 1st April 2026, the same subject sits at Section 99 of the Income-tax Act, 2025 — retained and renumbered as Section 99 of the Income-tax Act, 2025. Retained. Startups (DPIIT recognized) are granted massive leniency—they can carry forward losses even if shareholding changes, provided all original shareholders continue to hold their shares.
For Section 79, the practical impact is rated Critical. Protects startup valuations and VC funding rounds from destroying accumulated tax losses.
Sec 79
Provision Summary
Closely held companies cannot carry forward losses if there is a change in shareholding of more than 49% (i.e., less than 51% original voting power remains).
Sec 99
Provision Summary
Retained. Startups (DPIIT recognized) are granted massive leniency—they can carry forward losses even if shareholding changes, provided all original shareholders continue to hold their shares.
Key Changes & Highlights
- Integration with DPIIT database ensures eligible startups automatically bypass the 51% restriction rule.
Frequently Asked Questions
What is Section 79 of the Income Tax Act, 1961 about?
Section 79 of the Income Tax Act, 1961 covers carry forward and set off of losses in case of certain companies. Closely held companies cannot carry forward losses if there is a change in shareholding of more than 49% (i.e., less than 51% original voting power remains).
Which section replaces Section 79 in the Income-tax Act, 2025?
Section 79 of the Income Tax Act, 1961 maps to Section 99 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained. Startups (DPIIT recognized) are granted massive leniency—they can carry forward losses even if shareholding changes, provided all original shareholders continue to hold their shares.
What is the impact of the change to Section 79 under the new tax code?
The transition impact for Section 79 is rated Critical. Protects startup valuations and VC funding rounds from destroying accumulated tax losses.
What should I watch out for when Section 79 moves to the 2025 code?
Integration with DPIIT database ensures eligible startups automatically bypass the 51% restriction rule. These points are specific to Section 79 (Carry forward and set off of losses in case of certain companies).
Disclaimer: This mapping of Section 79 (Carry forward and set off of losses in case of certain companies) to Section 99 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 79 is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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