Section 117: accumulated losses and depreciation in statutory banking/insurance amalgamations

Amalgamations covered

This section overrides Section 2(6)(a) to (c) and Section 116, and applies where there has been an amalgamation of:

• One or more banking company with any other banking institution under a scheme sanctioned by the Central Government under Section 45(7) of the Banking Regulation Act, 1949, or with any other banking institution/company following a strategic disinvestment, where the amalgamation occurs within five years from the end of the tax year of that disinvestment;
• One or more corresponding new bank with any other corresponding new bank, under a scheme brought into force under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or 1980; or
• One or more Government company with any other Government company, under a scheme sanctioned under Section 16 of the General Insurance Business (Nationalisation) Act, 1972.

Effect of the carry-over

In each of these cases, the accumulated loss and unabsorbed depreciation of the amalgamating banking company/bank/Government company is deemed to be the loss or depreciation allowance of the amalgamated banking institution, company, corresponding new bank or Government company for the tax year in which the scheme of amalgamation was brought into force, and the Act's ordinary set-off and carry-forward provisions then apply.

Eight-year carry-forward cap

For a scheme of amalgamation brought into force on or after 1 April 2025, a loss forming part of the accumulated loss of the predecessor entity that is deemed to be the successor's loss can be carried forward for not more than eight tax years immediately succeeding the tax year in which such loss was first computed for the original predecessor entity.

Key definitions

"Accumulated loss" means so much of the loss of the amalgamating entity under "Profits and gains of business or profession" (excluding speculation-business losses) as it would have been entitled to carry forward and set off under Section 112, had the amalgamation not occurred.

"Banking company", "banking institution", "corresponding new bank" and "general insurance business" carry the meanings given to them in the respective Banking Regulation Act, 1949, Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970/1980, and General Insurance Business (Nationalisation) Act, 1972.

"Government company" means a Government company under Section 2(45) of the Companies Act, 2013, engaged in general insurance business and established under Sections 4, 5 or 16 of the General Insurance Business (Nationalisation) Act, 1972.

"Strategic disinvestment" has the meaning assigned to it in Section 116(3)(c)(i).

"Unabsorbed depreciation" means the depreciation allowance of the amalgamating entity that remains to be allowed and would have been allowed had the amalgamation not occurred.

Frequently asked questions