Unabsorbed depreciation generally carries forward without the ordinary eight-year limit and is treated differently from business loss.
Unabsorbed depreciation generally carries forward without the ordinary eight-year limit and is treated differently from business loss. It is applied after brought-forward business loss in the statutory sequence.
The allowance arises where current income cannot absorb tax depreciation. It can generally be set off more broadly than business loss, subject to specific restrictions and reorganisation rules.
Separate current depreciation, business loss and unabsorbed depreciation; perform current-year set-off; track amounts by year; apply statutory priority.
Brought-forward business loss ₹3 lakh and unabsorbed depreciation ₹5 lakh face current business profit ₹6 lakh. Set off business loss first, then ₹3 lakh depreciation; ₹2 lakh depreciation remains.
The example is an illustration, not a substitute for the taxpayer's facts. A change in status, period, payment mode, document, city, asset, relationship or scheme can change the result.
Search pages often state a rate or limit without identifying the governing base. The calculation must distinguish gross receipt from taxable profit, tax from TDS, a deduction from an exemption, salary from business income, and an accounting entry from the tax treatment.
| Decision point | Required treatment |
|---|---|
| Legal year | Use the Act, rules and notification effective for the income or transaction period |
| Taxpayer category | Confirm residence, age, entity, employee/business status and regime |
| Calculation base | Use the statutory definition rather than CTC, net bank receipt or accounting label |
| Ceiling or rate | Apply actual-amount, percentage, shared, lifetime and gross-income limits in sequence |
| Documentation | Link every input to an invoice, statement, contract, certificate or official record |
| Final output | Show tax, surcharge, cess, interest and TDS/TCS credits separately |
This page is written around the entities and concepts search engines expect for the topic: business loss, section 112, unabsorbed depreciation, carry forward. They are used only where relevant and are connected to the live calculator and knowledge hub rather than repeated mechanically.
For the complete rules on this topic, see the core guide: Set-Off and Carry Forward of Losses Under Income Tax.
See the broader Income-tax Act 2025 study guide hub for related rules and calculators on this topic.
Unabsorbed depreciation generally carries forward without the ordinary eight-year limit and is treated differently from business loss. It is applied after brought-forward business loss in the statutory sequence.
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