Section 121
Section 121: submission of return for losses
Section 121 is a short but important gatekeeping provision: a loss that has not been determined pursuant to a return filed under Section 263(1) cannot be carried forward and set off under the loss provisions of this Chapter. In practice, this means a taxpayer wanting to carry forward a loss must file the return on time.
What Section 121 says
"Irrespective of anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 263(1), shall be carried forward and set off under section 111(1) or 112(1) or 113(2) or 114(2) or 115(2)."
In other words, the right to carry forward a loss under Sections 111, 112, 113, 114 or 115 depends on that loss having first been determined on the basis of a return of income filed under Section 263(1).
Frequently asked questions
Which loss carry-forward provisions does Section 121 gate?
It covers losses to be carried forward under Section 111(1), 112(1), 113(2), 114(2) and 115(2).
What happens if the return isn't filed under Section 263(1)?
The loss cannot be carried forward and set off under those provisions unless it has been determined on the basis of a return filed under Section 263(1).
Related sections
Want this applied to your actual filing, not just explained?
File your return on time to preserve loss carry-forwardLast updated 9 September 2026