Rule 6 of the Draft Income-tax Rules, 2026 lays down the method for determining the period of holding of capital assets for the purposes of section 2(101)(c)(D). It specifies that the holding period for certain capital assets must be computed in accordance with the table provided. In cases where shares or debentures become the property of the assessee under section 70(1)(z), the holding period includes the duration for which the original bond, debenture, debenture-stock, or deposit certificate was held prior to conversion. For capital assets declared under the Income Declaration Scheme, 2016, the holding period of immovable property is reckoned from the date of acquisition if supported by a registered deed, while in other cases it is counted from 1 June 2016. Where a capital asset becomes the property of an Indian subsidiary upon conversion of a foreign company’s branch under section 219(1), the holding period includes the time for which the asset was held by the branch and, if applicable, by the previous owner under specified acquisition modes. Additionally, for amounts taxable as capital gains under section 67(10), the classification as short-term or long-term depends on the nature and status of the underlying asset at the time of taxation, including assets forming part of a block and self-generated assets or goodwill.
Extract of Rule No. 6 of Draft Income-tax Rules, 2026
Rule 6
Method of determination of period of holding of capital assets in certain cases.
(1) For the purposes of section 2(101)(c)(D), the period for which such capital asset is held by an assessee, shall be determined in accordance with the provisions of this rule.
(2) For the capital asset mentioned in column (B) of the Table below, the period for which the capital asset is held by the assessee shall be determined in accordance with column (C) thereof:
TABLE
| Sl | Nature of Assets | Period of holding |
| (A) | (B) | (C) |
| 1. | shares or debentures of a company, which becomes the property of the assessee under the circumstances mentioned in section 70(1)(z) of the Act | the period of holding shall include the period for which the bond, debenture, debenture-stock or deposit certificate, as the case may be, was held by the assessee prior to the conversion. |
| 2. | capital asset declared under the Income Declaration Scheme, 2016 | (i) in the case of an immovable property, the period for which such property is held is to be reckoned from the date on which such property is acquired, if the date of acquisition is evidenced by a deed registered with any authority of a State Government.
(ii) in any other case, the period for which such asset is held shall be reckoned from the 1st day of June, 2016 |
| 3. | capital asset which became the property of the Indian subsidiary company in consequence to conversion of a branch of a foreign company referred to in section 219(1). | the period of holding shall include the following:
(i) the period for which the asset was held by the said branch of the foreign company (ii) the period for which the asset was held by the previous owner, if any, who has acquired the capital asset by a mode of acquisition referred to in section 73(1) [Sl.No1. Column (A)] or section 219(1) |
(3) In case of the amount which is chargeable to income-tax as income of a specified entity under section 67(10) under the head “Capital gains”:
(a) the amount or a part of it shall be considered to be from transfer of short-term capital asset, if it is attributed to, –
(i) the capital asset which is short-term capital asset at the time of taxation of amount under section 67(10)
(ii)capital asset forming part of block of asset; or
(iii) capital asset being self-generated asset and self-generated goodwill as defined in section 67(11)
(b) the amount or a part of it shall be considered to be from transfer of long-term capital asset or assets, if it is attributed to capital asset which is not covered by clause (i) and is long-term capital asset at the time of taxation of amount section 67(10).
