Form 3CD Clause 32 Working Paper Format 2026
FORM 3CD CLAUSE 32 — BROUGHT-FORWARD LOSSES AND UNABSORBED DEPRECIATION WORKING PAPER
Assessee: {{client_name}} · PAN: {{client_pan}} · Previous year ended: {{period_end}} · Assessment Year: 2026-27
What the clause asks: (a) details of brought-forward loss or depreciation allowance, year by year, to the extent available — the amount as returned, the amount as assessed with the order reference, and remarks; (b) whether a change in shareholding of the company during the year means earlier losses cannot be carried forward under section 79; (c) whether the assessee incurred a speculation loss referred to in section 73 during the year; (d) whether it incurred a loss from a specified business referred to in section 73A; and (e) for a company, whether it is deemed to carry on a speculation business under the Explanation to section 73, with the speculation loss for the year.
1. Clause 32(a) — brought-forward loss and depreciation
| Sr. | Assessment year | Nature of loss / allowance | Amount as returned ₹ | Amount not allowed on opting for a concessional regime ₹ | Amount as assessed ₹ | Order: section and date | Set off in intervening years ₹ | Balance brought forward ₹ | Last AY for set-off | Remarks (appeals, rectification, late return) |
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| 1 | | Business loss (section 72) | | | | | | | | |
| 2 | | Speculation loss (section 73) | | | | | | | | |
| 3 | | Loss from specified business (section 73A) | | | | | | | | |
| 4 | | Unabsorbed depreciation (section 32(2)) | | | | | | | | |
| 5 | | Short-term capital loss | | | | | | | | |
| 6 | | Long-term capital loss | | | | | | | | |
| 7 | | | | | | | | | | |
| 8 | | | | | | | | | | |
- One row per assessment year per nature of loss. The columns for set-off, balance and last year are working columns for the file; the form itself asks for the returned and assessed amounts, the concessional-regime columns and remarks. Follow the utility’s column labels when keying in.
- "As assessed" means the figure after the latest order for that year — intimation under section 143(1), assessment, rectification, or an order giving effect to an appeal. Where the assessed figure differs from the returned figure, give both and explain in remarks. Where an assessment or appeal is pending, say so.
- Carry-forward periods: business loss — 8 assessment years after the year of loss; speculation loss — 4; specified-business loss and unabsorbed depreciation — no time limit; capital losses — 8.
- A loss can be carried forward only if the return for the loss year was filed within the due date under section 139(1) (section 80 read with section 139(3)). This does not apply to unabsorbed depreciation. Check the filing date of each loss year’s return and note any late return in remarks.
- Concessional regimes: an assessee taxed under section 115BAA, 115BAC, 115BAD or a similar provision cannot set off brought-forward loss or depreciation attributable to deductions that the regime denies (for example, additional depreciation). That is what the "not allowed" column records. One of the adjustment columns in the utility is restricted to a specific assessment year — leave it blank unless it applies.
- Losses of an amalgamating or demerged company brought in under section 72A need their own rows, with the scheme reference and the conditions checked.
2. Clause 32(b) — change in shareholding and section 79
| Loss year (AY) | Loss carried forward ₹ | Holders of 51% or more voting power on the last day of the loss year | Voting power held by the same persons on the last day of this year (%) | Section 79 applies? (Y/N) | Exception relied on | Evidence ref. |
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- Section 79 applies to a company in which the public are not substantially interested. A loss of an earlier year cannot be carried forward and set off unless, on the last day of the current previous year, shares carrying at least 51% of the voting power are beneficially held by the persons who beneficially held shares carrying at least 51% of the voting power on the last day of the year in which the loss was incurred.
- Test each loss year separately against its own year-end shareholding. Look at beneficial holding, so changes above the immediate shareholder may matter.
- Exceptions include: a change caused by the death of a shareholder or a gift to a relative; a change in the Indian subsidiary of a foreign company following an amalgamation or demerger of the foreign company, where 51% of its shareholders continue; a change under a resolution plan approved under the Insolvency and Bankruptcy Code; and an eligible start-up, which may instead satisfy the condition that all shareholders of the loss year continue to hold their shares, within the period the section allows. Read the current text of the section before relying on an exception.
- Section 79 speaks of losses. Unabsorbed depreciation carried forward under section 32(2) is generally treated, on judicial authority, as outside it — record the position taken.
- Answer the clause for the year in which the change happens, even if the company has profits and does not need the loss this year.
3. Clauses 32(c), (d) and (e) — losses of the current year
| Sub-clause | Question | Yes / No | Amount ₹ | Basis and evidence ref. |
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| 32(c) | Speculation loss referred to in section 73 incurred during the year (for example, intra-day equity trades and other transactions settled without delivery) | | | |
| 32(d) | Loss from a specified business referred to in section 73A (a business eligible for section 35AD) | | | |
| 32(e) | Company deemed to carry on a speculation business under the Explanation to section 73 — and the speculation loss, if any, for the year | | | |
- A speculation loss can be set off only against speculation profit; a specified-business loss only against profit of a specified business.
- Explanation to section 73: where any part of a company’s business is the purchase and sale of shares of other companies, that part is deemed a speculation business. It does not apply to a company whose gross total income consists mainly of income under the heads interest on securities, house property, capital gains and other sources, or whose principal business is banking, granting loans and advances, or trading in shares.
- Derivative trades on a recognised stock exchange that meet the conditions of section 43(5) are not speculative transactions; classify them before answering 32(c).
- For 32(e), a "Yes" is a statement about the company’s status. Give it even if the share-trading activity made a profit this year, and then report the loss as nil.
4. Evidence to obtain
- Returns of income and acknowledgements for every year with a loss or unabsorbed depreciation, showing the date of filing and the carry-forward schedule.
- Intimations, assessment orders, rectification orders and appeal-effect orders for those years; a list of pending proceedings from the e-filing portal.
- Last year’s Form 3CD clause 32 and the carry-forward schedule of the last return filed.
- Register of members, share-transfer register and beneficial-ownership declarations at each relevant year-end; documents for any exception claimed under section 79.
- Broker contract notes and ledger for share and derivative trades, split into delivery, intra-day and derivatives.
- Scheme of amalgamation or demerger and compliance evidence where section 72A losses are included.
5. Common errors
- Carrying the returned loss forward after an assessment has reduced it, or ignoring an appeal order that restored it.
- Mixing unabsorbed depreciation with business loss, so that the 8-year limit is applied to depreciation or not applied to the loss.
- Carrying forward a loss from a year in which the return was filed late.
- Continuing to show losses that have lapsed by time, or that were given up on entering a concessional regime.
- Answering "No" to 32(b) on the basis of the immediate shareholders when beneficial ownership has changed.
- Treating intra-day share-trading loss as ordinary business loss and leaving 32(c) blank.
6. Flow to the return of income
The clause 32(a) balances are the opening figures for the brought-forward-loss, unabsorbed-depreciation and carry-forward schedules of the return, where the current year’s set-off is worked out. The portal holds its own record of losses from earlier returns and orders; a difference between that record, this clause and the return usually results in the set-off being restricted when the return is processed. Agree all three before signing, and note in remarks any difference that cannot be resolved.
Conclusion: brought-forward business loss ₹ ____________; speculation loss ₹ ____________; specified-business loss ₹ ____________; unabsorbed depreciation ₹ ____________; capital losses ₹ ____________. Section 79 applies: ____ [Yes / No / Not applicable]. Matters for the partner: ____________.
Prepared by: {{prepared_by}} Reviewed by: Date: 1 October 2026
