Section 48 Mode of computation.
The income chargeable under the head “Capital gains” shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :—
(i) expenditure incurred wholly and exclusively in connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any improvement thereto;
(iii) in case of value of any money or capital asset received by a specified person from a specified entity referred to in section 45(4), the amount chargeable to income-tax as income of such specified entity under that sub-section which is attributable to the capital asset being transferred by the specified entity, calculated in the prescribed manner:
(Recently amended by Finance act, 2021)
For understand this amended clause, You can refer this below link
First Proviso to section 48 read with rule 115A
Provided that in the case of an assessee,
Rule 115BA Method of conversion and Calculation of Capital gain Accodingly
|Conversion of||Rate of Conversion||Date of Conversion|
|Cost of acquisition||Average Of Telegraphic Transfer Buying Rate & Telegraphic Transfer Selling Rate (TTBR & TTSR)||On the date of acquisition|
|Expenditure in connection with such transfer||On the date of Transfer|
|Full value of the consideration|
|Capital gains reconverted into Indian currency||TTBR (Benefit to Assesse)|
Second Proviso to section 48 Indexation in case LTCG on transfer of LTC asset.
Third Proviso to section 48 first and second provisos shall not apply where section 112A apply.
Fourth Proviso to section 48
Second proviso shall not apply to the long-term capital gain arising from the transfer of a long-term capital asset, being a bond or debenture other than—
(a) capital indexed bonds issued by the Government; or
(b) Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015:
Fifth Proviso to section 48
An Assessee being a non-resident, Capital Gain arise on the account of Appreciation of rupee against a foreign currency (it means value of Foreign Currency is depreciated- therefore to give benefit to non-resident, this 5th proviso came into existence, so that they do not preclude themselves in investment in the Indian Stock Market) at the time of redemption of rupee denominated bond (RDB)of an Indian company held by him, shall be ignored for the purposes of computation of full value of consideration under this section.
Sixth Proviso to section 48- MV = Sale consideration
Where shares, debentures or warrants referred to in section 47(iii) are transferred under a gift or an irrevocable trust, the market value on the date of such transfer shall be deemed to be the full value of consideration received or accruing as a result of transfer for the purposes of this section.
Seventh Proviso to section 48 – No STT Allowed
No deduction shall be allowed in computing the income chargeable under the head “Capital gains” in respect of any sum paid on account of securities transaction tax
There are only Four Cases where Indexation benefit will not be available
1. First Proviso to Section 48
2. Fourth proviso to Section 48
3. Slump Sale provided u/s 50
4. Long-term Capital Gain as per Section 112A