A not-so-sweet deal for M&A enthusiasts in Budget 2025: Less time for tax breaks, more red tape ahead
amalgamation (M&A) enthusiasts with a bitter taste, the latest budget brings a major change to the carry-forward of losses. Under the current system, companies undergoing amalgamation can carry forward losses for a generous eight-year period. But from April 1, 2025, onwards, that carry-forward period is being slashed — the losses will only be allowed for the residual period. So, if a merger happens five years after the company incurs a loss, it can only carry forward the loss for the remaining three years.
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For those unfamiliar, this carry-forward system is crucial as it helps offset taxable profits and reduce the tax burden for the new, amalgamated company. So, it's not exactly a small tweak — it’s a big hit for companies relying on those losses to cushion their tax bills.
However, not all is lost — for mergers taking place before March 31, 2025, the old rules will apply, meaning the losses can still be carried forward for up to eight years from the year of amalgamation. So, if your merger is in the pipeline before then, you’re safe.
That said, there's still some confusion around the exact applicability of the new rules, especially when it comes to the «appointed date» of the merger. Ameya Kunte, founder of Globeview Advisors, raises a valid point: What if the appointed date is
