Section 121 - Submission of return for losses
Capital loss, ordinary business loss, speculation loss, specified-business loss and race-horse loss cannot be carried forward unless determined pursuant to a return filed under section 263(1). Section 263(1) requires the return on or before the due date. Section 121 does not list house-property loss under section 110 or unabsorbed depreciation under section 33(11).
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current-law control
This page uses the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026. Earlier years and saved proceedings remain subject to the repeal-and-savings framework.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
Capital loss, ordinary business loss, speculation loss, specified-business loss and race-horse loss cannot be carried forward unless determined pursuant to a return filed under section 263(1). Section 263(1) requires the return on or before the due date. Section 121 does not list house-property loss under section 110 or unabsorbed depreciation under section 33(11).
Who should use this section
Taxpayers seeking to carry forward the losses specifically listed in section 121 This applicability note is specific to section 121.
Old-law bridge
1961 Act section 80
The bridge is navigational only. A 1961 Act case or rule is carried forward only after checking wording, transition provisions and the current 2025 Act text.
Professional alert
Exception / professional alert Do not equate a return that computes a loss with an automatic right to carry it. The loss must be determined in pursuance of the qualifying return.
Connected Income-tax Rules, 2026 and Forms
No provision-specific Rule/Form is independently mapped in this tranche. General return, procedure and evidence rules can still apply.
Worked application
A taxpayer files after the section 263(1) due date and reports ₹7 lakh capital loss and ₹2 lakh house-property loss. Section 121 blocks carry-forward of the capital loss. The house-property loss is not one of the listed sections, though all filing, assessment and evidentiary requirements still apply.
Evidence / compliance checklist
- Build a section 121 loss ledger showing source, head, tax year of origin, amount used and balance carried forward.
- Preserve the timely return and assessment/intimation that determines the loss where the statute makes filing a condition (section 121: Submission of return for losses).
- For reorganisations, retain scheme orders, ownership continuity, asset/business continuity and predecessor-successor tax records (section 121: Submission of return for losses).
- Prevent double use by reconciling the carry-forward schedule to each later return before set-off (section 121: Submission of return for losses).
Common mistake
Using a single “loss carried forward” figure for section 121 without preserving head/source restrictions, filing conditions and the remaining statutory period.
Recommended approach
For section 121, fix the governing tax year, identify the operative sub-section for “Submission of return for losses”, trace every amount to evidence, apply only verified Rule/Form links, and retain a computation that another reviewer can reproduce from the primary source.
Thresholds, periods and timing checkpoints
No standalone numeric threshold is extracted from the section text; apply the operative conditions and linked provisions.
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 121 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 121 merely because the subject is similar.
Related provisions
- Section 263
- Section 111
- Section 120
- Section 122
Current statutory text
Primary-source trail
FAQs
What does section 121 of the Income-tax Act, 2025 cover?
Section 121 covers submission of return for losses. The operative result depends on the exact statutory conditions shown on this page and applies from 1 April 2026, subject to transition/savings provisions.
Who should check section 121?
Taxpayers seeking to carry forward the losses specifically listed in section 121 This applicability note is specific to section 121.
Are there specific Rules or Forms for section 121?
No provision-specific Rule/Form independently mapped in this tranche.