In this article, we have provided a concise overview of the various provisions applicable to capital gains. Capital gains arise when there is a transfer of a capital asset, and we have discussed the meaning of a capital asset, the types of capital assets, and the period of holding that determine the nature of capital gains. The concept of transfer and transactions not regarded as transfer have also been explained. To compute capital gains, factors such as full value of consideration, cost of acquisition, cost to the previous owner, and cost of improvement are crucial. Additionally, we have covered the rates of tax on short-term and long-term capital gains. The article also touches upon the Capital Gain Account Scheme 1988 and the deductions or exemptions available under capital gains.
Income under the Capital Gains
Page Contents
- 1. Chargeability:
- 2. Meaning of Capital Asset [Sec 2(14)]
- 3. Type of Capital Assets
- 4. Period of Holding
- 5. Meaning of Transfer [Section 2(47)]
- 6. Transactions which are not regarded as transfer [Section 47]
- 7. Computation of capital Gain:
- 8. Computation of capital gain in case of sale of shares or debentures of an Indian company purchased by a non-resident in foreign currency [first proviso to section 48]
- 9. Full Value of Consideration
- 10. Cost of Acquisition
- 11. Cost to the Previous Owner [sec. 49(1)]
- 12. Cost of Improvement [Sec. 55(1)(b)]
- 13. Rates of tax on capital gains:
- 14. Reference to valuation officer [Section 55A]
- 15. Deduction/ Exemption under Capital Gain
- 16. Capital Gain Account Scheme 1988
1. Chargeability:
Capital gains shall be chargeable to tax if following conditions are satisfied:
a) There should be a capital asset. In other words, the asset transferred should be a capital asset on the date of transfer;
b) It should be transferred by the taxpayer during the previous year;
c) There should be profits or gain as a result of transfer.
2. Meaning of Capital Asset [Sec 2(14)]
Capital Asset is defined to include:
a) Any kind of property held by an assessee, whether or not connected with business or profession of the assessee.
b) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992.
However, the term ‘capital asset’ shall exclude the following:
a) Stock-in-trade, consumable stores, raw materials held for the purpose of business or profession;
b) Movable property held for personal use of taxpayer or for any member of his family dependent upon him. However, jewellery, costly stones, and ornaments made of silver, gold, platinum or any other precious metal, archaeological collections, drawings, paintings, sculptures or any work of art shall be considered as capital asset even if used for personal purposes;
c) Specified Gold Bonds and Special Bearer Bonds;
d) Agricultural Land in India, not being a land situated:
a. Within jurisdiction of municipality, notified area committee, town area committee, cantonment board and which has a population not less than 10,000;
b. Within range of following distance measured aerially from the local limits of any municipality or cantonment board:
i. not being more than 2 KMs, if population of such area is more than 10,000 but not exceeding 1 lakh;
ii. not being more than 6 KMs , if population of such area is more than 1 lakh but not exceeding 10 lakhs; or
iii. not being more than 8 KMs , if population of such area is more than 10 lakhs.
e) Deposit certificates issued under the Gold Monetisation Scheme, 2015
3. Type of Capital Assets
A. Short Term Capital Asset
Capital asset held for not more than 36 months immediately prior to the date of transfer shall be deemed as short-term capital asset. However, following assets held for not more than 12 months shall be treated as short-term capital assets:
a) Equity or preference shares in a company which are listed in any recognized stock exchange in India;
b) Other listed securities;
c) Units of UTI;
d) Units of equity oriented funds; or
e) Zero Coupon Bonds.
Note: Unlisted shares and immovable property (being land or building or both) held for not more than 24 months immediately prior to the date of transfer shall be treated as short-term capital asset.
B. Long Term Capital Asset
Capital Asset that held for more than 36 months or 24 months or 12 months, as the case may be, immediately preceding the date of transfer is treated as long-term capital asset.
4. Period of Holding
The period of holding shall be determined as follows:
|
Different situations |
How to calculate the period of holding |
| Shares held in a company in liquidation | The period subsequent to the date on which the company goes into liquidation shall be excluded. |
| Capital asset which becomes the property of the assessee in the circumstances mentioned in section 49(1) read with section 47 [i.e., when an asset is acquired by gift, will, succession, inheritance or the asset is required at the time of partition of family or under a revocable or irrevocable trust or under amalgamation, etc.] | The period for which the asset was held by the previous owner should be included (cost of acquisition in this case shall be computed in the manner provided in Para 4.10) |
| Allotment of shares in amalgamated Indian company in lieu shares held in amalgamating company | The period of holding shall be computed from the date of acquisition of shares in the amalgamating company. |
| Right shares | The period of holding shall be computed from the date of allotment of right shares. |
| Right entitlement | The period of holding will be considered from the date of offer to subscribe to shares to the date when such right entitlement is renounced by the person. |
| Bonus shares | The period of holding shall be computed from the date of allotment of bonus shares. |
| Issue of shares by the resulting company in a scheme of demerger to the shareholders of the demerged company | The period of holding shall be computed from the date of acquisition of shares in the demerged company. |
| Membership right held by a member of recognised stock exchange | In case of shares as well as trading/clearing rights, the period for which the person was a member of the stock exchange immediately prior to such demutualization/corporatization shall be included. |
| Flat in a co-operative society | The period of holding shall be computed from the date of allotment of shares in the society. |
| Sweat equity shares allotted by employer | The period of holding shall be reckoned from the date of allotment or transfer of such equity shares (applicable from the assessment year 2008-09) |
| Unit of a business trust [allotted pursuant to transfer of shares as referred to in section 47(xvii)] | The period of holding shall include the period for which shares were held by the assessee. |
| Conversion of preference shares into equity shares | The period of holding of equity shares shall include the period for which preference shares were held by the assessee |
| Units allotted to an assessee pursuant to consolidation of two or more scheme of a mutual fund as referred to in Section 47(xviii) | The period of holding of such units shall include the period for which the unit or units in the consolidating scheme of the mutual fund were held by the assessee. |
| Shares in a company acquired by the non-resident assessee on redemption of Global Depository Receipts referred to in Section 115AC(1)(b) | The period of holding of such shares shall be reckoned from the date on which a request for such redemption was made. |
| Transactions in shares and securities not given above: | |
| 1) Date of purchase (through stock exchanges) of shares and Securities
2) Date of transfer (through stock exchanges) of shares and securities 3) Date of purchase/transfer of shares and securities (transaction taken place directly between parties and not through stock exchanges) 4) Date of purchase/sale of shares and securities purchased in several lots at different points of time but delivery taken subsequently and sold in parts 5) Transfer of a security by a depository (i.e., demat account) |
a) Date of purchase by broker on behalf of investor.
b) Date of broker’s note provided such transactions are followed up by delivery of shares and also the transfer deeds. c) Date of contract of sale as declared by parties provided it is followed up by actual delivery of shares and the transfer deeds. d) The FIFO method shall be adopted to reckon the period of the holding of the security, in cases where the dates of purchase and sale cannot be correlated through specific number of scrips. e) The period of holding shall be determined on the basis of the first-in-first-out method. |
| Conversion of stock-in-trade into capital asset | The period of holding of such converted asset shall be reckoned from the date of conversion. |
| Conversion of gold into Electronic Gold receipt issued by Vault Manager | The period for which the assessee held the gold before conversion into EGR would be included in the period of holding of EGR |
| Conversion of Electronic Gold Receipt into gold | The period for which the assessee holds the EGR before conversion to gold would be included in the period of holding of gold |
5. Meaning of Transfer [Section 2(47)]
“Transfer”, in relation to a capital asset, includes:
(i) Sale, exchange or relinquishment of the asset;
(ii) Extinguishment of any rights in relation to a capital asset;
(iii) Compulsory acquisition of an asset;
(iv) Conversion of capital asset into stock-in-trade;
(v) Maturity or redemption of a zero coupon bond;
(vi) Allowing possession of immovable properties to the buyer in part performance of the contract;
(vii) Any transaction which has the effect of transferring an (or enabling the enjoyment of) immovable property; or
(viii) Disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever.
6. Transactions which are not regarded as transfer [Section 47]
Following transactions shall not be regarded as transfer (subject to certain condition). Hence, following transaction shall not be charged to capital gains:
|
Section |
Particulars |
| 46(1) | Distribution of asset in kind by a company to its shareholders at the time of liquidation |
| 47(i) | Distribution of capital asset on total or partial partition of HUF |
| 47(iii) | Transfer of capital asset under a gift or will or an irrevocable trust |
| 47(iv) | Transfer of capital asset by a company to its wholly owned subsidiary company |
| 47(v) | Transfer of a capital asset by a wholly owned subsidiary company to its holding company |
| 47(vi) | Transfer of capital assets in a scheme of amalgamation |
| 47(via) | Transfer of shares in an Indian company held by a foreign company to another foreign company under a scheme of amalgamation of the two foreign companies |
| 47(viab) | Transfer of share of a foreign company (which derives, directly or indirectly, its value substantially from the share or shares of an Indian company) held by a foreign company to another foreign company under a scheme of amalgamation (subject to conditions) |
| 47(viaa) | Transfer of capital assets in a scheme of amalgamation of a banking company with a banking institution |
| 47(vib) | Transfer of capital assets by the demerged company to the resulting company in a demerger |
| 47(vic) | Transfer of shares held in an Indian company by a demerged foreign company to the resulting foreign company |
| 47(vica) | Any transfer of a capital asset by the predecessor co-operative bank to the successor co-operative bank in a business reorganization. |
| 47(vicb) | Any transfer of capital asset (being shares) held by a shareholder in the predecessor co-operative bank if the transfer is made in consideration of the allotment to him of any shares in the successor co-operative bank in a scheme of business reorganization |
| 47(vicc) | Transfer of share of a foreign company (which derives, directly or indirectly, its value substantially from the share or shares of an Indian company) held by a demerged foreign company to resulting foreign company in case of demerger (subject to conditions) |
| 47(vid) | Transfer or issue of shares by the resulting company to the shareholders of the demerged company in a scheme of demerger |
| 47(vii) | Allotment of shares in amalgamated company in lieu of shares held in amalgamating company |
| 47(viia) | Transfer of capital assets (being foreign currency convertible bonds or GDR) by a non-resident to another non-resident |
| 47(viiaa) | Any transfer made outside India, of a capital asset (being rupee denominated bond of an Indian company issued outside India) by a non-resident to another non-resident |
| 47(viiab) | Any transfer of following capital assets by a non-resident on a recognised stock exchange located in any International Financial Services Centre:
a) Bond or GDR b) Rupee Denominated Bond of an Indian Co. c) Derivative d) Such other Securities as may be prescribed. |
| 47(viiac) | Any transfer of a capital asset by original fund to the resulting fund in a relocation. |
| 47(viiad) | Transfer of capital asset (being share, unit, interest), by a shareholder or unit holder or interest holder, held by him, in original fund in consideration for share or unit or interest in the resultant fund in a relocation. |
| 47(viiae) | Transfer of capital asset by India Infrastructure Finance Company to an institution established for financing the infrastructure and development. |
| 47(viiaf) | Transfer of capital asset, under a plan approved by the Central Government, by a public sector company to another public sector company |
| 47(viib) | Transfer of capital assets (being a Government security carrying periodic payment of interest) outside India through an intermediary dealing in settlement of securities by a non-resident to another non- resident |
| 47(viic) | Redemption of capital asset being sovereign gold bond issued by RBI under the Sovereign Gold Bond Scheme, 2015 |
| 47(viid) | Conversion of Gold into Electronic Gold Receipt issued by a Vault Manager, or Conversion of Electronic Gold Receipt into Gold. |
| 47(ix) | Transfer of a capital asset (being work of art, manuscript, painting, etc.) to Government, University, National museum, etc. |
| 47(x) | Transfer by way of conversion of bonds or debentures into shares |
| 47(xa) | Transfer by way of conversion of bonds [as referred to in section 115AC(1)(a)] into shares or debentures of any company |
| 47(xb) | Any transfer by way of conversion of preference shares into equity shares |
| 47(xi) | Transfer by way of exchange of a capital asset being membership of a recognized stock exchange for shares of a company |
| 47(xii) | Transfer of land by a sick industrial company which is managed by its workers’ co-operative |
| 47(xiii) | Transfer of a capital asset by a firm to a company in the case of conversion of firm into company |
| 47(xiiia) | Transfer of a capital asset being a membership right held by a member of a recognized stock exchange in India |
| 47(xiiib) | Transfer of a capital asset by a private company or unlisted public company to an LLP, or any transfer of shares held in the company by a shareholder, in the case of conversion of company into LLP |
| 47(xiv) | Transfer of a capital asset to a company in the case of conversion of proprietary concern into a company |
| 47(xv) | Transfer involved in a scheme of lending of securities |
| 47(xvi) | Transfer of a capital asset in a transaction of reverse mortgage made under a scheme notified by the Government |
| 47(xvii) | Transfer of a capital asset (being share of a special purpose vehicle) to a business trust in exchange of units allotted by that trust to the transferor |
| 47(xviii) | Transfer of units of a mutual fund pursuant to consolidation of two or more schemes of equity oriented mutual fund or of two or more schemes of a mutual fund other than equity oriented mutual fund |
| 47(xix) | Transfer of units of a mutual fund from one plan to another pursuant to consolidation of plans within scheme of mutual funds. |
| 47(xx) | Transfer of the interest in a Joint Venture in exchange for shares in a foreign company. |
7. Computation of capital Gain:
Computation of capital gain depends upon the nature of the capital asset transferred during the previous year, vis-à-vis, short-term capital asset, long-term capital asset or depreciable asset. Capital gain arising on transfer of short-term capital asset or depreciable asset is considered as short-term capital gain, whereas transfer of long-term capital asset gives rise to long-term capital gain.
The capital gains on transfer of capital asset shall be computed in the following manner:
|
Short-term capital assets [Section 48] |
Long-term capital assets
[Section 48] |
Depreciable asset
[Section 50]* |
| Full value of consideration
Less: Cost of acquisition of asset Less: Cost of improvement Less: Expenditure incurred wholly and exclusively in connection with such transfer |
Full value of consideration Less: Indexed Cost of acquisition (See Note 1) Less: Indexed Cost of Improvement (See Note 1) Less: Expenditure incurred wholly and exclusively in connection with such transfer |
WDV of block of asset at the beginning of previous year
Add: Actual cost of assets falling within that block acquired during the year Less: Full value of consideration of assets transferred during the year Less: Expenditure incurred wholly and exclusively in connection with such transfer |
* Short-term capital gain or loss from sale of depreciable asset will arise only in the following two situations:
a) When on last day of the previous year, WDV of the block of asset is nil; or
b) When on last day of the previous year, block ceases to exist.
Note 1: Indexed Cost of Acquisition and Improvement [Second Proviso to Section 48]
a) In case of transfer of long-term capital assets, indexed cost of acquisition and indexed cost of improvement shall be deducted from the full value of consideration;
b) Indexed cost of acquisition and Indexed cost of improvement shall be computed with reference to Cost Inflation Index (‘CII’) in the following manner:
|
Indexed Cost of Acquisition = |
[(Cost of Acquisition) × (CII for the year of transfer)] |
| (CII for the year of acquisition or for the Financial Year 2001-02, whichever is later) | |
| Indexed Cost of Improvement = | [(Cost of Improvement) × (CII for the year of transfer)] |
| CII for the year of Improvement |
Note : The base year for computation of capital gains has been shifted from 1981 to 2001 with effect from assessment year 2018-19. Thus, if any capital asset (acquired before April 1, 2001) is transfered then assessee has an option to take its cost of acquisition either as fair market value as on April 1, 2001 or its actual cost.
However, there are some cases where benefit of indexation is not available, which are as under:
|
Section |
Capital Asset | Transferor |
| Third Proviso to Section 48 | Long-term capital gains arising from transfer of an equity share, or a unit of an equity oriented fund or a unit of a business trust as referred to in Section 112A. | Any Person |
| Fourth proviso to section 48 | Bonds or debentures.
Note: However, indexation benefit is available on two type of bonds, namely,- • Capital indexed bonds (issued by the Government) • Sovereign Gold Bond (issued by the RBI under the Sovereign Gold Bond Scheme, 2015) |
Any person |
| 112 | Capital gains arising from transfer of unlisted shares (which is taxable at concessional rate of 10%) as calculated without giving effect to first proviso to Section 48 | Non-resident |
| 44AE | Presumptive income from business of plying, hiring or leasing of goods carriage if assessee does not own more than 10 goods carriage. | For Heavy Goods Vehicle:
Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by assessee. For Other Goods Vehicle: Rs. 7,500 for every month or part of a month during which the goods carriage is owned by assessee. |
| 50A | Depreciable asset (other than an asset used by a power generating unit eligible for depreciation on straight line basis) | Any person |
| 50B | Undertaking/division transferred by way of slump sale as covered by section 50B | Any person |
| 115AB | Units purchased in foreign currency as given in section 115AB | Offshore fund |
| 115AC | Global depository receipts (GDR) purchased in foreign currency as given in section 115AC | Non-resident |
| 115ACA | Global depository receipts (GDR) purchased in foreign currency as given in section 115ACA | Resident individual – employee |
| 115AD | Securities as given in section 115AD | Foreign Institutional
Investors |
CII in relation to a previous year means such index, as Central Government notifies on year to year basis.
The Central Government has notified the following Cost Inflation Indexes
| Financial year | Cost Inflation Index |
| 2001-02 | 100 |
| 2002-03 | 105 |
| 2003-04 | 109 |
| 2004-05 | 113 |
| 2005-06 | 117 |
| 2006-07 | 122 |
| 2007-08 | 129 |
| 2008-09 | 137 |
| 2009-10 | 148 |
| 2010-11 | 167 |
| 2011-12 | 184 |
| 2012-13 | 200 |
| 2013-14 | 220 |
| 2014-15 | 240 |
| 2015-16 | 254 |
| 2016-17 | 264 |
| 2017-18 | 272 |
| 2018-19 | 280 |
| 2019-20 | 289 |
| 2020-21 | 301 |
| 2021-22 | 317 |
| 2022-23 | 331 |
| 2023-24 | 348 (provisional) |
In such a case, capital gain shall be determined as under:-
|
Full Value of Consideration (X) |
Find out sale consideration in Indian currency and convert it into same foreign currency, which was used to acquire the capital asset, at average exchange rate* on the date of transfer. |
| Cost of acquisition (Y) | Find out the cost of acquisition in Indian currency and convert it into foreign currency at average exchange rate on the date of acquisition. |
| Expenditure on sale (Z) | Find out the expenditure on transfer in Indian currency and convert it into same foreign currency at average exchange rate on the date of transfer (not on the date when expenditure is incurred). |
| Capital gain (X-Y-Z) | The capital gains as computed in after reducing the cost of acquisition and expenditure from the full value of consideration shall be reconverted into Indian currency at buying rate** on the date of transfer. |
* Average exchange rate means the average of the telegraphic transfer buying rate and telegraphic transfer selling rate of the foreign currency initially utilised in the purchase of capital asset.
** Buying rate is the telegraphic transfer buying rate of such currency.
9. Full Value of Consideration
Full value of consideration is the consideration received or receivable by the transferor in lieu of assets, which he has transferred. Such consideration may be received in cash or in kind. If it is received in kind, then fair market value (‘FMV’) of such assets shall be taken as full value of consideration.
However, in the following cases “full value of the consideration” shall be determined on notional basis as per the relevant provisions of the Income-tax Act, 1961:
|
S. No. |
Nature of transaction | Section | Full Value of Consideration |
| 1. | Money or other asset received under any insurance from an insurer due to damage or destruction of a capital asset | 45(1A) | Value of money or the FMV of the asset (on the date of receipt) |
| 2. | Conversion of capital asset into stock-in-trade | 45(2) | FMV of the capital asset on the date of conversion |
| 3. | Transfer of capital asset by a partner or member to firm or AOP/BOI, as the case may be, as his capital contribution | 45(3) | Amount recorded in the books of accounts of the firm or AOP/BOI as the value of the capital asset received as capital contribution |
| 4. | Distribution of capital asset by Firm or AOP/BOI to its partners or members, as the case may be, on its dissolution | 45(4) | FMV of such asset on the date of transfer |
| 5. | Money or other assets received by share- holders at the time of liquidation of the company | 46(2) | Total money plus FMV of assets received on the date of distribution less amount assessed as deemed dividend under section 2(22)(c) |
| 6. | Buy-back of shares and other specified securities by a company | 46A | Consideration paid by company on buyback of shares or other securities would be deemed as full value of consideration. The difference between the cost of acquisition and buy-back price (full value of consideration) would be taxed as capital gain in the hands of the shareholder.
However, in case of buy-back of shares by a domestic company (whether listed* or unlisted), the company shall be liable to pay additional tax at the rate of 20% under section 115QA on the distributed income (i.e., buy-back price as reduced by the amount received by the company for issue of such shares). Consequently, capital gain arising in hands of shareholder shall be exempt by virtue of section 10(34A) in such cases. |
| 7. | Shares, debentures, warrants (‘securities’) allotted by an employer to an employee under notified Employees Stock Option Scheme and such securities are gifted by the concerned employee to any person | Fourth Proviso to Section 48 | Fair Market value of securities at the time of gift |
| 7A. | Conversion of capital asset into stock-in-trade | 49 | FMV of the inventory as on the date of conversion |
| 7B. | The transfer of a Specified Mutual Fund acquired on or after 1st April 2023 or a Market Linked Debenture | 50AA | Full value of consideration a rising out of transfer or redemption or maturity of such debenture or unit as reduced by-
(a) The cost of acquisition of the debenture or unit; and (b) Expenditure incurred wholly and exclusively in connection with such transfer or redemption or maturity. |
| 7C. | Computation of capital gains in case of slump sale | 50B | FMV of the capital assets (being an undertaking or division transferred by way of slump sale) as on the date of transfer shall be deemed to be full value of the consideration received or accruing as a result of transfer of such capital asset. Such FMV shall be calculated in the prescribed manner. |
| 8. | In case of transfer of land or building, if sale consideration declared in the conveyance deed is less than the stamp duty value | 50C | The value adopted or assessed or assessable by the Stamp Valuation Authority shall be deemed to be the full value of consideration. However, no such adjustment is required to be made if value adopted for stamp duty purposes does not exceed 110% of the sale consideration.
Note: Where the date of agreement (fixing the amount of consideration) and the date of registration for the transfer of property are not the same, the value adopted or assessed or assessable by Stamp Valuation Authority on the date of agreement may be taken as full value of consideration. |
| 8A. | Where consideration for transfer of unquoted shares is less than the Fair Market Value | 50CA | The Fair Market Value (so determined in prescribed manner) shall be deemed to be the full value of consideration Note: The Board may prescribe transactions undertaken by certain class of persons to which the provisions of Section 50CA shall not be applicable. (w.e.f. Assessment Year 2020-21) |
| 9. | If consideration received or accruing as a result of transfer of a capital asset is not ascertainable or cannot be determined | 50D | FMV of asset on the date of transfer |
10. Cost of Acquisition
Cost of acquisition of an asset is the amount for which it was originally acquired by the assessee. It includes expenses of capital nature incurred in connection with such purchase or for completing the title of the property.
However, in cases given below, cost of acquisition shall be computed on notional basis:
|
S. No. |
Particulars | Notional Cost of Acquisition |
| 1. | Additional compensation in the case of compulsory acquisition of capital assets | Nil |
| 2. | Assets received by a shareholder on liquidation of the company | FMV of such asset on the date of distribution of assets to the shareholders |
| 3. | Stock or shares becomes property of taxpayer on consolidation, conversion, etc. | Cost of acquisition of such stock or shares from which such asset is derived |
| 4. | Allotment of shares in an amalgamated Indian co. to the shareholders of amalgamating co. in a scheme of amalgamation | Cost of acquisition of shares in the amalgamating co. |
| 5. | Conversion of debentures into shares | That part of the cost of debentures in relation to which such asset is acquired by the assessee |
| 5A. | Conversion of preference shares into equity shares | The part of the cost of preference shares in relation to which such asset is acquired by the assessee. |
| 6. | Allotment of shares/securities by a co. to its employees under ESOP Scheme approved by the Central Government | a) If shares are allotted during 1999-2000 or on or after April 1, 2009, FMV of securities on the date of exercise of option
b) If shares are allotted before April 1, 2007 (not being during 1999-2000), the amount actually paid to acquire the securities c) If shares are allotted on or after April 1, 2007 but before April 1, 2009, FMV of securities on the date of vesting of option (purchase price paid to the employer or FBT paid to employer shall not be considered) |
| 6A. | Listed Equity Shares or Units of Equity Oriented Funds or Units of Business Trust as referred to in Section 112A acquired before February 1, 2018. | Higher of :
(i) Cost of acquisition of such asset; and (ii) Lower of: (A) The fair market value of such asset; and (B) The full value of consideration received or accruing as a result of transfer of such asset. Note: For meaning of ‘Fair market Value’ refer Explanation to Section 55(2)(ac). |
| 7. | Property covered by section 56(2)(vii) or (viia) or (x) | The value which has been considered for the purpose of Section 56(2)(vii) or (viia) or (x) |
| 8. | Allotment of shares in Indian resulting company to the existing shareholders of the demerger company in a scheme of demerger | Cost of acquisition of shares in demerged company ? Net book value of assets transferred in demerger ? Net worth of the demerged company immediately before demerger |
| 9. | Cost of acquisition of original shares in demerged company after demerger | Cost of acquisition of such shares minus amount calculated above in point 8. |
| 10. | Cost of acquisition of assets acquired by successor LLP from predecessor private company or unlisted public company at the time of conversion of the company into LLP in compliance with conditions of Section 47(xiiib) | Cost of acquisition of the assets to the predecessor private company or unlisted public company |
| 11. | Cost of acquisition of rights of a partner in a LLP which became the property of the taxpayer due to conversion of a private company or unlisted public company into the LLP | Cost of acquisition of the shares in the co. immediately before conversion |
| 12. | Depreciable assets covered under Section 50 | Opening WDV of block of assets on the first day of the previous year plus actual cost of assets acquired during the year which fall within the same block of assets |
| 13. | Depreciable assets of a power generating unit as covered under Section 50A* | WDV of the asset minus terminal depreciation plus balancing charge |
| 14. | Undertaking/division acquired by way of slump sale as covered under Section 50B | Net worth of such undertaking |
| 15. | New asset acquired for claiming exemptions under sections 54, 54B, 54D, 54G or 54GA if it is transferred within three years | Actual cost of acquisition minus exemption claimed under these sections |
| 16. | Goodwill of business/profession or trade mark or brand name associated with business or right to manufacture, produce or process any article or thing or right to carry on any business or profession, tenancy right, stage permits or loom hours | a) If such asset were acquired by the assessee by purchase from a previous owner; cost of acquisition means amount of purchase price;
b) In the case falling under sub-clauses(i) to (iv) of sub-section (1) of section 49 and such asset was acquired by the previous owner by purchase; cost of acquisition means amount of purchase price for such previous owner; and c) in any other case, cost of acquisition shall be taken to be nil. |
| 17. | Right shares | Amount actually paid by assessee |
| 18. | Right to subscribe to shares (i.e., right entitlement) | Nil |
| 19. | Bonus shares | a) If allotted to the assessee before April 1, 1981: Fair market value on that date b) In any other case: Nil |
| 20. | Allotment of equity shares and right to trade in stock exchange, allotted to members of stock exchange under a scheme of demutualization or corporatization of stock exchanges as approved by SEBI | a) Cost of acquisition of shares: Cost of acquisition of original membership of the stock exchange
b) Cost of acquisition of trading or clearing rights of the stock exchange: Nil |
| 21. | Capital asset, being a unit of business trust, acquired in consideration of transfer as referred to in section 47(xvii) | Cost of acquisition of shares as referred to in section 47(xvii) [applicable from AY 2015-16] |
| Units allotted to an assessee pursuant to consolidation of two or more scheme of a mutual fund as referred to in Section 47(xviii) | Cost of acquisition of such units shall be the cost of acquisition of units in the consolidating scheme of the mutual fund | |
| Shares in a company acquired by the non-resident assessee on redemption of Global Depository Receipts referred to in Section 115AC(1)(b) | Cost of acquisition of such shares shall be calculated on the basis of the price prevailing on any recognized stock exchange on the date on which a request for such redemption was made. | |
| 24. | Any other capital asset: | a) If it became property of taxpayer before April 1, 2001 by gift, will, etc., in modes specified in section 49(1): Cost of acquisition to the previous owner or FMV as on April 1, 2001, whichever is higher
b) If it became property of taxpayer before April 1, 2001 : Cost of acquisition or FMV as on April 1, 2001, whichever is more c) If it became property of taxpayer after April 1, 2001 by gift, will, etc., in modes specified in section 49(1): Cost of acquisition to the previous owner d) If it became property of taxpayer after April 1, 2001 : Actual cost of acquisition |
* Terminal Depreciation/Balancing Charge:
a) Balancing Charge = Sales Consideration – WDV of the depreciable asset
b) Terminal Depreciation = WDV – Sales Consideration
When a depreciable asset (which was subject to depreciation on straight line basis) of a power generating units is sold, discarded, demolished or destroyed then terminal depreciation shall be deductible from sale consideration while computing capital gains, or balancing charge is taxable in the relevant year, as the case may be.
11. Cost to the Previous Owner [sec. 49(1)]
Cost to the previous owner shall be deemed to be the cost of acquisition in the hands of the taxpayer in cases where a capital asset becomes the property of the assessee under any of the modes given below:
a) On any distribution of assets on the total or partial partition of a HUF
b) Under a Gift or Will;
c) By Succession, Inheritance or Devolution;
d) On any distribution of assets on dissolution of a firm, BOI or AOP (where such dissolution had taken place at any time before the 01-04-1987);
e) On any distribution of assets on liquidation of a company;
f) Under a transfer to a revocable or an irrevocable trust;
g) On any transfer by a holding company to its wholly owned Indian subsidiary company;
h) On any transfer by a wholly owned subsidiary company to its Indian holding company;
i) On any transfer by the amalgamating company to the Indian amalgamated company;
j) In a scheme of amalgamation, any transfer of shares held in a Indian company by a amalgamating foreign company to the amalgamated Foreign company;
k) Consequent to transfer of share(in a scheme of amalgamation as referred to in Section 47(viab)of a foreign company which derives, directly or indirectly, its value substantially from the share or shares of an Indian company held by amalgamating foreign company to the amalgamated foreign company.
l) Consequent to transfer of capital asset by the demerged company to the resulting Indian company. (in case of demerger)
m) Consequent to transfer of share (in case of demerger as referred to in Section 47(vic)of a foreign company which derives, directly or indirectly, its value substantially from the share or shares of an Indian company held by a demerged foreign company to resulting foreign company.
n) Any transfer, in a scheme of amalgamation of a banking company with a banking institution;
o) On any transfer in a scheme of business reorganization of a cooperative bank;
p) On any transfer in a scheme of conversion of private company or unlisted company into LLP;
q) On any transfer in case of conversion of Firm or Sole proprietary concern into Company;
r) By HUF where one of its members has converted his self-acquired property into joint family property.
Note:
Where previous owner has also acquired the property in the aforesaid manner the ‘previous owner’ of the property shall be construed as the last previous owner who acquired the property by means other than those stated above.
12. Cost of Improvement [Sec. 55(1)(b)]
Cost of improvement, in relation to the capital assets shall include all capital expenditure incurred in making addition or alteration to the capital assets by the assessee or the previous owner. However, cost of improvement does not include any expenditure incurred prior to 01-04-2001. Cost of improvement shall be computed in the following manner:
|
S. No. |
Particular | Cost of Improvement |
| 1. | In relation to goodwill of a business, right to manufacture, produce any article or thing or right to carry on business or profession | NIL |
| 2. | In relation to capital asset which becomes property of the assessee or previous owner before 01-04-2001 | Any expenditure of capital nature incurred on or after 01-04-2001 |
| 3. | In relation to capital asset which becomes property of the assessee or previous owner before 01.04.2001 by way of any mode specified under Section 49(1) | Any expenditure of capital nature incurred on or after 01-04-2001 by the assessee or the previous owner |
| 4. | In relation to capital asset which becomes property of the assessee or previous owner on or after 01.04.2001 | Any expenditure of capital nature incurred by the assessee or the previous owner |
| 5. | In relation to capital asset which becomes property of the assessee or previous owner on or after 01-04-2001 by way of any mode specified under Section 49(1) | Any expenditure of capital nature incurred by the assessee or the previous owner |
13. Rates of tax on capital gains:
1. Short Term Capital Gains
a) Short-term capital gains shall be included in the gross total income of the taxpayer and will be taxed at the normal rates;
b) Short-term capital gains arising from transfer of Equity Shares, Units of an Equity Oriented Funds or a unit of a business trust which is chargeable to securities transaction tax shall be taxed at 15% under Section 111A;
Note:-
Now benefit of reduced rate of tax (i.e., 15%) shall be available w.e.f. 1-4-2016 even in respect of income arising from transfer of units of a business trust which were acquired by assessee in lieu of shares of special purpose vehicle as referred to in section 47(xvii).
2. Long Term Capital Gains
a) Long-term capital gains are subject to tax at 20%;
b) Long-term capital gains arising from transfer of listed securities, units or a zero coupon [other than as referred to in point d) below] bonds shall be taxable at lower of following:
i. 20% after taking benefit of indexation; or
ii. 10% without taking benefit of indexation.
c) Long-term capital gains arising to a non-residents or foreign company from transfer of unlisted securities shall be taxed at without giving benefit for indexation;
d) Long-term capital gains arising from transfer of listed equity share, or a unit of an equity oriented fund or a unit of a business trust as referred to in Section 112Ashall be chargeable to tax at the rate of 10% in excess of Rs. 1 Lakh.
14. Reference to valuation officer [Section 55A]
With a view to ascertaining the fair market value of a capital asset, the concerned Assessing Officer may refer the valuation of the capital asset to a Valuation Officer appointed by the Income-tax Department in the following cases:
1) Where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer (who works in a private capacity under a licence issued by the Board and his valuation is not binding on the Assessing Officer), but the Assessing Officer is of opinion that the value so claimed is at variance with the fair market value of the asset;
2) Where the Assessing Officer is of opinion that the fair market value of the asset exceeds the value of the asset by more than Rs. 25,000 or 15 per cent of the value claimed by the assessee, whichever is less; or
3) Where the Assessing Officer is of opinion that, having regard to nature of an asset and relevant circumstances, it is necessary to make a reference to the Valuation Officer
15. Deduction/ Exemption under Capital Gain
Particulars |
Section 54 |
Section 54B |
Section 54D |
Section 54EC |
Section 54EE |
Section 54F |
Section 54G |
Section 54GA |
Section 54GB |
Eligible taxpayers |
Individual and HUF |
Individual and HUF |
Any person |
Any person |
Any Person |
Individual and HUF |
Any person |
Any person |
Individual and HUF |
Capital gains eligible for exemption |
Long-term |
Short-term or Long-term |
Short-term or Long-term |
Long-term |
Long-term |
Long-term |
Short-term or Long-term |
Short-term or Long-term |
Long-term |
Capital gains arising from transfer of |
Residential House property |
Agriculture land used by taxpayer or by his parents or HUF for agriculture purposes in last 2 years before its transfer |
Compulsory acquisition of land or building forming part of industrial undertaking (which was used for industrial purposes for at least 2 years before its acquisition). |
Any long-term capital asset being Land or Building or Both |
Any long-term capital asset |
Any long term asset (other than a residential house property) provided on date of transfer taxpayer does not own more than one residential house property (except the new house) |
Land, building, plant or machinery, in order to shift industrial undertaking from urban area to rural area. |
Land, building, plant or machinery, in order to shift industrial undertaking from urban area to SEZ. |
Residential property (house or a plot of land)
|
Assets to be acquired for exemption |
One residential house propertyOrTwo residential house propertiesNote:With effect from Assessment Year 2020-21, a taxpayer has an option to make investment in two residential house properties in India. This option can be exercised by the taxpayer only once in his lifetime provided the amount of long-term capital gain does not exceed Rs. 2 crores. |
Agricultural land (may be in urban area or rural area) |
Land or building for shifting or reestablishing said industrial undertaking |
Bond of NHAI or REC, etc. |
Units of such fund as may be notified by Central Government to finance start-ups |
One residential house property |
Land, building, plant or machinery, in order to shift industrial undertaking to rural area. |
Land, building, plant or machinery, in order to shift industrial undertaking to SEZ. |
Subscription in equity shares of an eligible company.
|
Time limit for acquiring the new assets |
Purchase: within 1 year before or 2 years after date of transferConstruction: within 3 years after date of transfer |
Within 2 years after date of transfer |
Within 3 years from date of receipt of compensation |
Within 6 months from date of transfer |
Within 6 months after the date of transfer of original asset |
Purchase: within 1 year before or within 2 years after date of transferConstruction: within 3 years after date of transfer |
within 1 year before or 3 years after date of transfer |
Within 1 year before or within 3 years after date of transfer |
Investment by the assessee –
|
Exemption Amount |
Investment in new assets or capital gain, whichever is lowerNote: if the cost of new asset exceeds Rs. 10 crore, the excess amount shall be ignored and Rs. 10 crore shall be taken into consideration |
Investment in agricultural land or capital gain, whichever is lower |
Investment in new assets or capital gain, whichever is lower |
Investment in new assets or capital gains, whichever is lower, however, subject to Rs. 50 lakhs. |
Investment in new assets or capital gains, whichever is lower, however, subject to Rs. 50 lakhs. |
Investment in new assets X capital gain/net considerationNote: if the cost of new asset exceeds Rs. 10 crore, the excess amount shall be ignored and Rs. 10 crore shall be taken into consideration |
Investment in new assets or capital gain, whichever is lower |
Investment in new assets or capital gain, whichever is lower |
Investment in new assets X capital gain/net consideration |
Withdrawal of exemption |
If new asset is transferred within 3 years of its acquisition |
If new asset is transferred within 3 years of its acquisition |
If new asset is transferred within 3 years of its acquisition |
If new asset is transferred or it is converted into money or a loan is taken on its securitywithin 5 years of its acquisition |
If new asset is transferred within a period of 3 years from the date of its acquisition.
|
a) If new asset is transferred within 3 years of acquisition,b) if another residential house is purchased within 2 years of transfer of original asset;c) if another house is constructed within3 years of transfer of original asset |
If new asset is transferred within 3 years of acquisition |
If new asset is transferred within 3 years of acquisition |
If equity shares in company or new asset acquired by company is sold or transferred within a period of 5 years from date of acquisition.
|
Deposit in Capital gains deposit scheme before due date under Sec. 139(1) |
Yes |
Yes |
Yes |
No |
No |
Yes |
Yes |
Yes |
Yes |
16. Capital Gain Account Scheme 1988
a) The scheme is open to all taxpayers, who wish to claim exemption under Sections 54, 54B, 54D, 54F, 54Gor 54GB.
b) If taxpayer could not invest the capital gains to acquire new asset before due date of furnishing of return, the capital gains can be deposited before due date for furnishing of return of income in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.
c) w.e.f. Assessment Year 2024-25, if the capital gains deposited in the Capital Gains Scheme Account (CGSA) exceed Rs. 10 crores, the excess amount shall not be taken into account while computing capital gain exemption under section 54.
d) w.e.f. Assessment Year 2024-25, where the net consideration deposited in the CGSA exceeds Rs. 10 crores, the excess amount shall not be taken into account while computing capital gain exemption under section 54F
Read Also:-
Tax Treatment of Income from Salary in Brief
All about Income from House Properties
Profits and Gains from Business and Profession
Tax Treatment of Income from Other Sources
[As amended by Finance Act, 2023]
I have sold my ancestral house in 1.20 cr in June, 2022. CG was Rs. 69 lakh. Invested Rs. 50 lakh in CG bond. CG tax paid on remaining Rs. 19 lakh. Now, I want to purchase a house property. Can I reclaimed CG tax paid on Rs. 19 lakh. Please advise.
A plot was purchased in my wifes name during April2005 and the value reflcted in sale deed was 2.45 lakhs. The same was sold on jan 21 for a value of Rs 40 lakhs reported in the sale deed. She files returns every year but the taxable income is less than the allowable value and hence no tax. What is the capital gains and when it will be reflected in IT and how to avoid it. If it can be reinvested, before when it has to be done to avoid CGT
Long term Cap Gains: Interest paid on SBI housing loan eligible for exemption under section 48 or otherwise?
Mr.X gifts a land worth ₹10L SDV to Mr. Y
Here Y is taxable under IFOS sec 56(2)(x)
And Mr X is not taxable under Capital Gain head because it is exempt tranfer under sec 47.
#What if Mr.X sell it for ₹1 to Mr.Y .What will be the tax treatments??
#And What will be the tax treatments if he sells it for ₹10L itself?
In 2010,5 people purchased land contributing equally but registered in one person’s name only. It was sold in 2021.plz explain how to share & pay capital gains by all 5 people individually
5 people contributed & purchased property in the name ofone person in 2010& sold in 2021. Whether all 5 people can pay capital gains individually?
What is tax rate on long term capital gain on sale of residential flat
Where does it says that property should be registered property for eligibility of claiming LTCG and how there be discriminations for assessee who are reqularly investing property buying and selling in a cyclic manner where department not even question or verifying whther property bought or sold are registered property under registration act
Where as when assesse sold the apartment and deposited LTC in into bank LTCG deposit scheme and while requesting for NOC in
form G the lowest level officer ACIT DCIT without applying any mind reopening cases interrupting the various sections and then issuing notices after notices clueless misusing the powers vested on them and taking advantages of lockdown exercise etc etc. towards carno pandemic situation in delaying the matters further period
Its good there is lot of
experinces I am gaining by intracting with you and it updating knowledge and learning experience at this point of my age 72 YEARS.
I am not CA OR ADVOCATE NOR DOING ANY PROFESSIONAL WORK.
I AM JUST TAKING CARE MY SONINLAW’S MATTER WHERE HIS SALE OF PROOERTY BEING QUESTION BY REOPNING OF ASSESSMENT AY 2016- 17
FOR THE APARTMENT RESOLD IN 2015, DEPOSITED ENTIRE SALE PROCEEDS IN LTCG DEPOSIT OPENED IN NATIONALIZED BANK, DECLATED INCOME OF HOUSE EARNINGS IN THE ITR, HAVING PAID THE TAX ON CAPITAL INDEXATION COST
EVENTOUGH NO TAX AT ALL PAYABLE ON LTC LOSS TRANSACTIONS.
THE APARTMENT WAS ORIGINALLY BOOKED IN 2008, ENTERED INTO AGREEMENT WITH THE BUILDERS FOR UDS LAND PORTION AGREEMENT AND OTHER ONE FOR CONSTRUTION AGREEMENT.
ON ITR SUBMITTED AO NOT RAISED ANY OBJECTIONS
BUT WHEN ASSESSEE REQUESTED FOR FORM G NOC TO CLOSE LTCG DEPOSITS IN BANK THE AO/ PR.COMMISSIONER WAKING UP WITH THE ISSUES THAT INCOME ESCAPED TO DECLARE IN THE RETURNS BY THE ASSESSEE AND ISSUED NOTICES UNDER SECTION 147,148,143,142, 281B etc etc and application submitted in 2019 for request for NOC to closure of LTC deposits in the bank which is about Rs.1.00 crore blocked from year of deposit 2015 to till date…
Assessee is salary class category and silver status appreciated assessee by the income tax department and at the same time alleging the assessee that he had evaded the tax on LTCG turnover in 2015 AY 2016-17
It has been just above month since you posted your woes. It’s not a long time from the Taxmenn’s prospective. However, for an Assessee who is experiencing the pinch, he would like to get the relief ASAP. Your 1 Cr fund has been blocked for years.
is there any light at the end of the tunnel ?
I am interested to sale my house constructed in 1990-1991 on housing board plot . I have no bills available regarding expenditure . How can be calculated the capital gains and how much tax can be saved
Kindly clarify the Note regarding cost of acquisition in special cases, say where shares have been received under a gift. The note says,
Where previous owner has also acquired the property in the aforesaid manner the ‘previous owner’ of the property shall be construed as the last previous owner who acquired the property by means other than those stated above.
This clarifies how cost of acquisition shall be arrived at in case there is re-transfer of shares which were received originally as gift through transfer and such shares are subsequently sold. However, will there be any tax liability if a person who had originally received the shares through a transfer, does not sell his shares but only transfers it as gift to another/ same person?
Sir
I have a capital gain of 1.1 crore and I have reinvested 40 lacs out of it, in an agricultural property. I only have one house in my name. If I purchase another house worth 70 lacs, will I be exempted from the capital gain tax?
Kindly guide me sir.
Thanks
my mom had cgas account before purchaisng new house she expired wiht one year left and money will transfered to nominee or cgas account will continue where nominee can purchase new house or nominee has to pay tax or he can get relief by purchaising new house pl clarify
Can you please inform the taxation for Buy Back of listed equity shares?
Respected Sir,
I have one residential plot worth Rs. 7 lacs and one residential house worth Rs. 40 lacs both purchased in 1993 and 2001 respectively. Now I want to buy new property by selling both the properties. Please tell how should I manage.
With regards,
Naresh Kumar Gupta
9816424252
Said to have been – ‘Republished with Amendments’
Ref. 10. Cost of Acquisition
…………………
Item 24
The latest amendment effected by the FA 2020 does not seem to have been incorporated.
And, for a critique thereof, look up the post on Linkedin- reshared !
If ACIT not accepting the declared return value of apartment for LTCG us.54 of ITax then ACIT can Reference to valuation officer [Section 55A]
With a view to ascertaining the fair market value of a capital asset, the concerned Assessing Officer may refer the valuation of the capital asset to a Valuation Officer appointed by the Income-tax Department. ACIT should not deny the benefit on the ground that construction agreement not registered hence the value to be taxed us.50
on income tax mater LTCG out sale of apartment. ACIT, The assessing officer reopening the assessment of 2015-16 now and add back housing income to tax fully just because the builder’s joint construction agreement not registered and only land agreement registerd.
[5/19, 22:18] SRS: If ACIT not accepting the declared return value of apartment for LTCG us.54 of ITax then ACIT can Reference to valuation officer [Section 55A]
With a view to ascertaining the fair market value of a capital asset, the concerned Assessing Officer may refer the valuation of the capital asset to a Valuation Officer appointed by the Income-tax Department. ACIT should not deny the benefit on the ground that construction agreement not registered hence the value to be taxed us.50
[5/19, 22:24] SRS: I wanted to contact you on income tax mater LTCG out sale of apartment. ACIT, The assessing officer reopening the assessment of 2015-16 now and add back housing income to tax fully just because the builder’s joint construction agreement not registered and only land agreement registerd.
a)I hv matter under sec 54 LTCG.
Both a and b are straight forward cases and especially my
son in law’s
LTCG is tax paid as per INDEXATION and Capital gain deposit account to be closed for which applied for Noc in form – G somewhere in Aug 2019 and upto feb the ITO assessing officer of ACIT cader pushing the matter wisely and in mar they have issued notice under 147 for reopening and disputing the declared already taxpaid long term capital gain of AY 2015-2016.
With my experience gained in taxation matters and legal mater during my services made submissions etc and now due to corona virus things not getting moved further..
If ACIT not accepting the declared return value of apartment for LTCG us.54 of ITax then ACIT can Reference to valuation officer [Section 55A]
With a view to ascertaining the fair market value of a capital asset, the concerned Assessing Officer may refer the valuation of the capital asset to a Valuation Officer appointed by the Income-tax Department. ACIT should not deny the benefit on the ground that construction agreement not registered hence the value to be taxed us.50
a)I hv matter under sec 54 LTCG.
Both a and b are straight forward cases and especially my
son in law’s
LTCG is tax paid as per INDEXATION and Capital gain deposit account to be closed for which applied for Noc in form – G somewhere in Aug 2019 and upto feb the ITO assessing officer of ACIT cader pushing the matter wisely and in mar they have issued notice under 147 for reopening and disputing the declared already taxpaid long term capital gain of AY 2015-2016.
With my experience gained in taxation matters and legal mater during my services made submissions etc and now due to corona virus things not getting moved further..
Hello,
I need experts help, I have long term capital gain from sale of unlisted shares, there is long term capital gain, to save tax on LTCG u/s 54 F, I have booked a residential apartment, this will take approx 2 years to finished and take possession but in between I want to keep selling shares to pay once demand comes, how to use this sale proceed ? how to show cap gain in income tax and claim exemption, Pls help me, Thank you
If I make an investment in a start-up company and exit after 30 months resulting in a gain of 400000 rs. How much will be the capital gain tax I’ve to pay. My income tax slab is 30%.
Pl advise , in case land cost ,book vakue 5 laks , its revalued @ Rs.20.lakks in sole proprietor business and its succeeded by company u/s.47(xiv).At this point -there is no tranfer.but the said land sold by company on later date , what will be the cost of acquisition for calculating capital gain
Different situations – How to calculate the period of holding
“Flat in a co-operative society – The period of holding shall be computed from the date of allotment of shares in the society.”
Beg ur pardon !
Can any law EXpert(s) in TN or KAR
(being some such states where , invariably, no formal housing ‘society’, duly registered, is known to exist ; and /or no shares issued for any reason)
venture and furnish an ANSWER / enlighten the most confused not- so- well -informed taxpayers ?!
Dear Sir,
I am working in a France based MNC and in 2010 company has given me 100 shares (Approc say 6.0 Lakhs) which are listed in EUROPE. At that time itself, company has deducted TDS @ 30% from my salary (say 1.8 Lakhs).
In 2016 there was a merger in the company and shares were doubled to 200 with rate per share reduced to half.
Now in 2017 I have sold those shares at a lesser amount (say 4.8 Lakhs).
So my query is can i get a exemption in tax since I have already given tax at a higher value & sold them in a lesser amount.
Answer require to the following illustration.
1.GPA-cum-Sale done in F.Y. 2011 for Rs.10,80,000/- stamp duty paid Rs.70,000/-
2. Sold the same in F.Y. 2013 for 30,20,000/-.
3. Purchased another property in F.Y. 2013 Rs.18,00,000/-
Please guide
A building was demolished and the vacant land was sold. now for the purpose of capital gains computation can the cost of demolished building be taken for indexation or only the cost of vacant land is allowed? Someone please clarify this.
Shares originally held in Pvt Ltd.Company which was subsequently converted into Public Limited Company – Whether capital gain on sale of such shares 3 years after conversion is eligible for exemption u/s10(38). If so what is the cost of acquisition in such case.Any identical case is available?
We accidentally paid the stamp duty during agreement to sale in previous financial year and seller also missed noticing the same. While we only made payment of 20% of the property in previous financial year and rest is paid in April in this financial year after taking the loan. Now we have sale deed due this Monday. Can anyone please help me understand the year of capital gain here, as my seller is asking me to compensate 50% of the loss in tax he has to pay this year by july as the stamp duty was paid last year. Is there a way to solve this issue as the property is not yet “Transferred”, the capital gain should not be considered in the last financial year. We are very confused on how to resolve this so seller gets his year of time to think if he wants to re-invest or pay taxes. He is demanding 50% difference in tax amount as per the inflation based calculations.
My mother 85yrsold,lost her husband 90 yrs 2 yrsback. My father built a house on purchased landin1969. Now the property is my mother’ S and being alone she has settled with her children. She plans to dispose the old house with land now,which is 48 yrs old. Does she has to pay capital gains tax.? She has no plans to buy any property now. She wants to spend her last days with care of children.
NARELA INDUSTRIAL AREA DELHI PLOT CIRCLE RATE IS 325 LACKS APPX. BUT THE MARKET VALUE IS BETWEEN AROUND 200. THIS IS THE FACT. WHILE CALCULATING THE LONG TERM CAPITAL GAIN OUR SALE CONSIDERATION WILL BE 325 OR 200.
IF 325 THAN WHAT YOU ADVISE WE SHOULD DO SO THAT SALE VALUE MAY BE CONSIDERED 200.
INVESTMENT IN BOND CAN BE MORE THAN 50 LACKS TO SAVE CAPITAL GAIN TAX.
WHICH BOND WE SHOULD TAKE
Hello
Can we claim Exemption under more than one sections. For example, long term capital gain is Rs. 1 crore. Can we claim capital gain tax exemption under section 54, 54D and section 54EC, all collectively ?
Dear Sir,
please solve my problem
can long term capital gain reduce to pay housing loan of residential house…
if
,1. loan on same property
2. loan on other Residential property
please advice me
thanks
my mother was land purchased in ay 1997-98 and she is doing sale in ay 2016-17, we are not investing or not purchased in a land within three yrs. what should be rate of tax deposited by me on capital gain if I am not obtain indexation and the Long term capital gain tax. pl. give me solution. A K SINHA
Reply
Respected All,
I have a query. I have held a particular share of a listed company for more than 3 years. After 3 years of holding the company became unlisted. can i claim long term loss on shares held by me of such a company even though iam holding the shares?. please reply
I have sold shares of unlisted company and received money. While reinvesting the money the date of Transfer of Shares was taken as the starting date and from there withing the specified time invested in purchase of building property hence claimed exemption from capital gains. Now the Department is taking a stand that the date of Money received will be considered as starting date. Please, clarify. Unless the Shares are officially transferred to the buyer we can not invest this money, because any time the buyer or the seller can change their stand.
if i have some shares which are of unlisted company and when i sold the shares then the company is listed, what will be the effect on Long Term capital gain???
G.MOIJI/ LATHAJI/GUPTAJI:
Unless i see your basic documents filed with ROI for AY relevant, guessing would lead to misinterpretation of relevant sections of IT Act 1961 when tested on the anvil of constitution of india..if desired you can email to my id rapidanalysts@gmail.com with Scans as attachments,without any obligation to each other… tks n regds
My mother sold some old (unlisted) shares which had been held for more than 10 years. She purchased NHAI 54EC Capital Gain Bonds for part of the proceeds. When filing ITR, the bonds amount was subtracted from the Long Term Capital Gains. IT Assessment is saying that this deduction for NHAI capital gain bonds is not allowed and that she must pay 20% tax on the entire gain. Any advise appreciated.
Sandeep you may be conscientious; when u make mistakes hope you tell i am sorry, but that cult is not with many that is what i hear as a tax lawyer sir. so this comment by me might have some civilizing effect on CAs i believe.. indeed you are all taxation accountants when so minimum grip on tax laws would get you more prestigious position to you all.
SEE SIRS, TAX PAYERS EMPLOY CAs TO DO THEIR ROIs PROPERLY AS TAX LAWS ARE A GREAT MAZE OF CONFUSION, HOW ANY ORDINARY TAX PAYER WOULD PROPERLY APPRECIATE?
WHEN YOU HIRE A CA IS IT NOT HIS RESPONSIBILITY TO PROPERLY GUIDE THE TAX PAYER CLIENT?
HOW COME INCOME TAX CALLS SOME ‘SARAL’ ETC? IS IT NOT CHEATING BY DEPARTMENT OF TAXATION?
EVEN TAX MEN REALLY DO NOT UNDERSTAND THE TAX PROVISIONS BUT THEY ARBITRARILY DO GIVE ALL KINDS OF NOTICES WITHOUT FOLLOWING PROCEDURAL LAWS EVEN EITHER MAY BE DUE TO IGNORANCE OF PROCEDURE LAID DOWN BY THEIR OWN STATUTE OR OTHERWISE.WOULD IT BE CALLED ‘RULE OF LAW’.
THEREFORE CONSTITUTIONAL COURTS IRE IS ON DEPARTMENT OF TAX JUSTIFIABLY.
WHEN CLIENTS’ CA DID FAIL OR FAILED WHY HE CANNOT BE QUESTIONED BY THE ICAI UNDER ITS ACT SAYS SO MANY TAX PAYERS, INDEED IT APPEARS A REASONABLE DEMAND AS CAs CALL THEMSELVES AS GREAT TAXATION ACCUNTANTS.
DUE TO THEY BEING CALLED TAXATION ACCOUNTANTS, CLIENTS AS TAX PAYER TRUST AND GIVE IN TO THEIR PROFESSIONAL WORK, IF THEY FAIL IS IT NOT A BREACH OF CONTRACT THAT MEANS UNDER CONTRACT ACT SEC 17 (FRAUD) WHY SHOULD NOT BE QUESTIONED UNDER LAWS OF CRIMES SAYS SEVERAL TAX PAYERS… SEEMS A RIGHT DEMAND… BUT MANY CLIENTS JUST DO NOT LIKE TO CAUSE A MOVE AGAINST CAs MEANS, TAX PAYER CLIENTS ARE VERY FAIR GENTLEMEN IS FURTHER CONFIRMED
MY ADVICE TO THE PROFESSION IS PLEASE GIVE YOUR CONSCIENTIOUS TIME IN CLIENTS’ TAXATION WORK, IF YOU DO NOT HAVE TIME THEN DIVERT TO ONE WHO CAN DO MEANINGFULLY, ELSE THE PROFESSION GENERATES BSD NAME TO THE PROFESSION.
I SAY THIS AS A CONCERNED ADVOCATE!
My father gave me 5 acres agricultural land worth 1.5 lacks as a gift 25 years ago. 8 years before the land was categorized in Bio Diversity zone and i have sold the it in 2013 @61 lacks whereas the govt land value was 1 crore 6 lacks. Recently i received a notice from Income Tax office with Body “Tax and capital gains on transfer of immovable property. On verification of information available it is observed that during the financial year 2013, property ___ for rs 61 lacks whereas the value of asset property as per the SRO is rs 1 crore 6 lacks registered with SRO. Requested to furnish details of income tax filing of sale and pan card and other documents”
Requested to advise whether we should we pay capital gain or not.
And Should the sale of land to be shown in income ta filing.
i have only LTCG,NO OTHER INCOME,HOW MUCH BASIC EXEMPTION WILL I ENJOY? FOR A.Y.2014-15
read the property is purchased some ten years ago not ten years age pls!
good read. if one sells his flat bought ten years age falling under LTCG, if no index is taken will the transferror need to pay capital gains tax 10% or 20%? pla clarify. tks
One flat was purchased in 2006-07 and amount of compensation for return of flat was received in 2014-15 through apex court 80% of the award given by the court principal with 15% interest and for balannce the matter to be decided in due course. Pl tell the tax implication.