Can I continue business loss after switching from old to new tax regime? | Mint

I claimed business losses two years ago under the old tax regime. I carried them forward in my last year’s Income Tax Return (ITR), once again under the old regime. In the current assessment year, I plan to switch to the new regime. Can I convey the losses reported in the old regime last year? New tax regime is the standard tax system made for individuals from the last judgment year 2024–25, unless they choose from it to choose the old regime. Business income taxpayers must carefully step, especially those who continue business losses or disabled depreciation of earlier years while choosing between the old and new regime this year. Also read: Wealth Transfer: How the next generation can preserve it according to section 115bac (2) of the Income Tax Act, taxpayers cannot set the loss or value loss or depreciation of the conditions if related to deductions not allowed under the new regime. These deductions include additional depreciation in terms of section 32 (1) (iia), investment linked deductions (eg sections 35AD, 35 (1) (ii)/(iia)/(iii), 33ab, 33aba) and chapter vi-a deductions (except 80ccd (2), 80cch (2) and 80 jjaa). Any losses that are not linked to the above, which include regular business expenses or basic depreciation (under section 32 (1) (ii)), can still be transferred and departed, even under the new regime. Here are two practical scenarios of business losses that can be transferred in the new tax regime. First of all, a trader incurred loss due to regular expenses such as rent, salary, electricity, etc. The nature of these deductions is normal business expenses, and the losses that have arisen in the deduction of these expenses can be continued. Another example is a freelance that claims on a laptop (normal tariff) disabled depreciation. Also read: Why Kalpen Parekh of DSP has now raised on hybrid funds, here are two practical scenarios where the execution of losses is not allowed in the new regime – a manufacturer who has claimed a loss due to additional depreciation on machinery and b) a Start -Up demanded under Article 35Ad, which is not allowed. Taxpayers must analyze their worn forward losses items. If there are significant losses in the past related to deductions now allocated, the switch to the new regime can forfeit their setup. In such cases, one can still choose from the new regime by submitting Form 10-Sea before or before the expiration date. However, if the losses relate to standard business operations or normal depreciation, the new regime does not hinder their deposition. Also read: Are mutual funds of small caps still risky? This is what reveals the March 2025 stress test – all you need to know that the new regime offers lower tax rates, but fewer deductions. Therefore, a comparative tax calculation – which is eligible for losses – is essential. Bhawna Kakkar, Chartered Accountant and Founder, Kakkar & Company, Chartered Accountants If you have any personal financing inquiry, write to us at [email protected] to answer it by experts. First Published: 20 Apr 2025, 08:58 PM IST