INCOME FROM CAPITAL GAIN

1. Basis of Charge
(i) There must be any Capital Asset.
(ii) It was transferred during P.Y.
(iii) Any Gain is arising from it.
2. Capital Asset
May be used for business or otherwise, may be movable or immovable may be fixed or floating.
Assets which are not capital assets:-
(a) Stock-in-trade
(b) Movable asset held for personal use exclusion – jewellery, paintings, sculptures, drawings,
archeological collection or any work of art.
(c) Agriculture land in rural area.
(d) 6½% Gold Bond, 7% Gold Bond Gold deposit bond special bearer bond & National Defense Gold
Bond.
3. Rural Area
(a) Area in Municipal limit having population less than 10000.
(b) If Population is 10000 – 100000 than after 2 km.
(c) If Population is 100000 – 1000000 than after 6 km.
(d) If Population is more than 1000000 than after 8 km.
4. Two types of Capital Assets
(i) Short term capital assets: Which are held by assesses for a period upto 36 months.
(ii) Long term capital assets: Which are not short term means which are held for more than 36 months.
Exceptions:
 A security including shares (other than unit) listed in a recognized stock exchange in India.
 a unit of an equity oriented fund
 a zero coupon bond if held for more than 12 months qualify as Long Term Capital Assets and
 Unlisted Shares of a company and land or building or both if held for more than 24 months qualify
as Long Term Capital Assets.

5. Capital Gain: Calculation of Capital Gain

STCG LTCG
Full value of consideration ** Full value of consideration **
Less Exp. on Trf. ** Less Exp. on Transfer **
Net Consideration ** Net Consideration **
Less Cost of acquisition ** Less Indexed Cost of acquisition **
Cost of Improvement ** ** Indexed Cost of improvement ** **
STCG or STCL ** LTCG or LTCL **
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6. Transfer: It includes sale, Exchange, Relinquishment, Compulsory acquisition etc.

 In case of assessee being Individual/HUF, who enters into a specified agreement for development of
a project, the capital gains shall be chargeable in the year in which certificate of completion for whole
or part of project is issued by competent authority.
 There are certain type of transaction which have the effect of transferring or enabling the enjoyment
of an immovable property
Example: A person a become a member of cooperative society, company or other associations of
persons which may be building houses / flats. When he pays an agreed amount, the society etc.
hands over possession of the house to the person concerned. No conveyance is registered. For the
purpose of income tax the above transaction is a transfer

7. Sec.47: There are some transactions which are not treated as transfer Certain transaction which will not
be regarded for the purpose of capital gains tax:
1. Total or partial partition of a HUF
2. A gift or will or an irrevocable trust
3. Transfer of capital asset by holding company to its subsidiary company
4. Transfer of capital asses by a subsidiary company to its holding company
5. Transfer of capital asset by amalgamating company to amalgamated company, in a scheme of
amalgamation.
6. Transfer of capital asset by the demerged company to the resulting company, in a scheme of
demerger.
7. Transfer or issue of shares by a resulting company, in a scheme of demerger.
8. Transfer of shares by a shareholder in a scheme of amalgamation.
9. Transfer of Rupee denominated bond outside India by a non-resident to another non-resident.
10. Transfer of Government Security outside India by a non-resident to another non-resident.
11. Redemption of sovereign gold bonds by an Individual.
12. Transfer of specified capital asset to the Government or university etc.
13. Transfer on conversion of bonds or debentures etc. into shares or debentures.
14. Conversion of preference shares into equity shares.
15. Transfer of capital asset under Reverse Mortgage.
16. Transfer of unit/s by a unit holder under consolidating scheme of Mutual Fund.
17. Transfer of unit/s by a unit holder under consolidating plan of Mutual Fund.

8. Sec.55 : Cost of Acquisition

(i) It is including of any expenditure incurred on acquisition e.g. commission etc.
(ii) If any subsidy received then to be deducted
(iii) Ground rent paid will not be included.
(iv) If any loan is taken then interest will be included in COA if not deductible elsewhere.
(v) If assesses file suit against company to compel it register share in his name then Litigation exp will
include in COA.
(vi) If loan is for Depreciable assets then interest may be revenue or capital nature.
(vii) Where property has been mortgage by the previous owner during his life time & assesses, after
inheriting the same has discharged the mortgage debt, the amount paid by him shall include in COA.
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9. Indexed Cost of Acquisition

 If any LTCA is transfer on or after 1 April 2001 then INDEXED COA will be deducted.
 Indexation is not available on debenture or Bond other than Indexed Bond issue by Govt. or
sovereign gold bond issued by RBI
Cost Inflation Index: The cost inflation indices for the financial years so far have been notified as
under:
Financial year Cost Inflation Index Financial year Cost Inflation Index
2001-02 100 2011-12 184
2002-03 105 2012-13 200
2003-04 109 2013-14 220
2004-05 113 2014-15 240
2005-06 117 2015-16 254
2006-07 122 2016-17 264
2007-08 129 2017-18 272
2008-09 137 2018-19 280
2009-10 148 2019-20 289
2010-11 167 2020-21 301
2021-22 317

10. Sec.55 : Cost of Improvement

If assessee incurred any capital expenses or addition in asset on or after 1 April 2001 that it is called cost
of improvement.
(i) It does not include any expense which is deductible under any other provision of act.
(ii) Any expenses to protect the title will be included.
(iii) If assesses file any suit on company to make change in AOA that may result in increase of market
price of his share then those exp. are also COI.
(iv) In case of Goodwill, Patent and Copyright etc.COI will be Nil.
(v) Any improvement made only on or after 1 April 2001 (whether by assessee or by previous owner in
case of sec. 49 (1)) will be considered.

Notional Cost of Acquisition & Capital gain in some special situation

11. Sec. 49(1): If assesses had acquired the asset in any of manner mentioned below. The COA for previous
owner will be taken his COA
(i) Acquired by Members of HUF on its partition.
(ii) Acquired under Gift or Will.
(iii) Acquired under succession, inheritance.
(iv) Acquired on dissolution of firm/AOP/BOI before 1 April 1987.
(v) Acquired under revocable or irrevocable trust.
(vi) Acquired by subsidiary company from its holding company or vice-versa.
(vii) Acquired in scheme of Amalgamation.
(viii) Acquired in scheme of demerger
(ix) By conversation by an individual of his separate property into a HUF property
COA = Cost to very first owner.
Period for ST or LT = from date on which acquired by immediately previous owner.
Indexation: - From date on which acquired by assesses. Or Alternatively As per Bombay High cost
Decision In case of CIT vs. Manjula J Shah we can take Indexation from the date when asset is acquired by
P.O
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12. Sec.49(1): If assessee or Previous owner acquire asset before 1 April 2001
(i) Actual COA or F.M.V. on 1 April 2001. Whichever is more will be taken as COA.
(ii) This option is not available for:-
(a) Depreciable Assets.
(b) Intangible assets e.g. Goodwill, Patent, Copyright etc. Whether self generated or purchased.
13. COA in case of Bonus Share & Right Share
(i) Bonus Share: If acquired without any payment
COA = NIL
If acquired before 1 April 2001 then FMV of 1 April 2001 will taken as COA.
(ii) Right Share:-
Cost of Shares: - Actual
If right renounced then COA – Nil
Right shares which are purchased by the person in whose favour the assesses has renounced the right
entitlement – purchased price paid to the renounce of rights entitlement as well as the amount paid
to the company which has allotted the rights shares.

Sec.55
14. If assessee or Previous owner acquire asset before 1 April 2001
(iii) Actual COA or F.M.V. on 1 April 2001. Whichever is more will be taken as COA.
(iv) This option is not available for:-
(c) Depreciable Assets.
(d) Intangible assets e.g. Goodwill, Patent, Copyright etc. Whether self generated or purchased.

15. If Share of Amalgamated company were acquired in place of Amalgamating company

(a) Total cost of share in amalgamating company will be taken as total cost of share of amalgamated
company.
(b) Time for LT / ST or indexation will be taken from the acquisition of share in amalgamating company.

16. COA in case of acquisition of share of resulting company in place of share of demerged Company
𝐂𝐎𝐀 𝐨𝐟 𝐬𝐡𝐚𝐫𝐞 𝐢𝐧 𝐫𝐞𝐬𝐮𝐥𝐭𝐢𝐧𝐠 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 =

COA of share in demeged company X

Net Worth = Paid up share capital + General reserve

COA of remaining share in demerged company = Original cost – Amount calculated above.

17. COA in case of conversion of debenture into share

(a) Total cost of Debentures will take as total COA of share.
(b) Time for LT or ST or Indexation will be taken from acquisition of debenture.

18. COA on consolidation or bifurcation of shares or conversion of PSC to ESC

Total COA of original share will taken as total COA of New consolidated or bifurcated shares.
Time for LT/ST- from the date of holding original shares

19. COA on devaluation of Rupee

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If any asset is purchased in foreign currency and in future any amt. had to pay due to devaluation of
currency then that extra amount will add in COA.

20. If any capital asset converted into stock-in-trade after 1 April 1984
Any capital gain is not chargeable in year of conversion
Whole profit will taxable in year of Sale of Stock.
(i) Difference between FMV on date of conversion and actual COA will be calculated as capital gain.
Indexation will be applicable upto year of conversion (not up to year of sale).
(ii) Difference between sale consideration & F.M.V. will treated as business profit.

21. If any claim received from insurance company

(i) Value of asset received or cash will be sale consideration.
Capital gain will be chargeable in the year of receipt of claim

22. Sec.51: If any advance money is forfeited by assesses

(i) Forfeited amt. will deducted from COA and then net COA will be indexed.
(ii) If asset acquired before 1 April 2001 and we take FMV of 1 April 2001 as COA then also
deductable whether the amount is forfeited before or after 1 April 2001.
(iii) If asset acquired as per Sec 49(1) then amount forfeited by previous owner will not deducted.
(iv) However w.e.f AY 2015-16(i.e. from 01.04.2014), Advance Money forfeited will be included under the
head Income from Other Sources.

23. Sec.46: Distribution of asset to shareholders on liquidation of company

(i) This is not treated as transfer for company hence no capital gain is chargeable for company.
(ii) In the hands of shareholders
(a) Money received (+) FMV of assets distributed (-) deemed dividend u/s 2(22)(c)
(b) Full value of consideration for the purpose of section 48: To be considered for computing capital
gains in the hands of shareholders.

24. Sec. 46A: Capital gain on buyback of shares or other securities

(i) In case of listed shares or other specified securities – the difference between the cost of acquisition
and the value of consideration received
(ii) In case of unlisted shares –In case of buyback of unlisted shares by domestic companies, additional
income tax @ 20% (plus surcharge @ 12% and cess @ 4%) is leviable in the hands of the company. So
capital gain in exempted for shareholder u/s 10(34A)

25. COA of asset acquired by Staff under ESOP or ESOS

F.M.V. of asset on date of receipt.
This cost will be taken only when the value of these shares was earlier taxable under head salary in year
of allotment. If share were earlier tax free then FMV will not taken as COA.

26. If any asset earlier acquired by Nonresident in Foreign currency is transfer by him
(i) Asset may be long term or short term.
(ii) Calculated in same currency in which acquired.
(a) Sale consideration: First taken in Indian rupee the converted into foreign currency as per average
rate of currency on date of sale.
(b) Cost of acquisition & improvement : As per average rate of currency on date of acquisition or
improvement
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(c) Capital Gain: First calculated in foreign currency then converted into Indian rupee as per buying
rate of currency on date of sale.
27. General Provision [Section 45(1)]
Any profits or gains arising from the transfer of a capital asset effected in the previous year (other than
exemptions covered under this chapter) shall be chargeable to Income-tax under this head in the
previous year in which the transfer took place.

Year of chargeability- Capital gains are chargeable as the income of the previous year in which
the sale or transfer takes place. In other words, the relevant date is date of transfer is not the date
of the agreement to sell.

28. Insurance Receipts [Section 45(1A)]

Where any person receives any money or other assets under any insurance from an insurer on account
of damage to or destruction of any capital asset, as a result of flood, typhoon, hurricane and earthquake
or fire etc. then such amount received chargeable under the head capital gain and chargeable in the
year in which such money or assets received not on the date of distruction.
Full value of consideration: In order to compute capital gains, the value of any money or the fair market
value of other assets on the date of such receipt.
-
29. Unit Linked Insurance Policy Receipts [Section 45(1B)]
Where any person receives, at any time during any previous year, any amount, under a ULIP issued
on or after 1.2.2021, to which exemption under section 10(10D) does not apply on account of –

(i) premium payable exceeding ` 2,50,000 for any of the previous years during the term of such
policy; or
(ii) the aggregate amount of premium exceeding ` 2,50,000 in any of the previous years during
the term of any such ULIP(s), in a case where premium is payable by a person for more than
one ULIP issued on or after 1.2.2021,
then, any profits or gains arising from receipt of such amount by such person shall be chargeable to
income-tax under the head “Capital gains” and shall be deemed to be the income of the such person
for the previous year in which such amount was received.

30. Conversion or treatment of a capital asset as stock-in-trade [Section 45(2)]

A person when convert capital assets as stock in trade, then capital gain shall be chargeable in the year
in which such stock is sold, not on the date of conversion, so transfer in the year in which capital assets
transfer but chargeable to income tax in which such stock sold.
Full value of consideration: The fair market value of the asset on the date of such conversion or
treatment
31. Compensation on compulsory acquisition [Section 45(5)]
If any capital assets or building of any person taken over by central government by way of compulsory
acquisition then compensation received from government chargeable under capital head in that year in
which such compensation received not on the date of compulsory acquisition.
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Enhanced Compensation- If the court awards a compensation which is higher than the original
compensation, the difference(as a enhanced compensation) chargeable to capital gains in the year
in which the same is received from the government.
Cost of acquisition in case of enhanced compensation -Nil

Compensation received in pursuance of an interim order deemed as income chargeable to tax in the
year of final order – chargeable in the year in which final court order received.

32. Sec.45(2A): Transfer of shares held in Demat Form

 Under this Scheme, the Shareholder does not have a Certificate to claim ownership of a Share(s) in a
Company. His interest is reflected by way of entries in the books of a Depository (an Intermediary
Agent who maintains the records of Shareholders).
 It is similar to a Bank Account where the Account Holder, and not the Banker, is the true owner of the
money value of sum indicated against his name in the Bank’s books.
1. Person Liable: Sale of shares held in a Dematerialized Form with a Depository, is chargeable to
tax as the income of the Beneficial Owner.
2. Cost of Acquisition and Period of Holding:
(a) Cost of Acquisition and the period of holding shall be determined on the basis of FIFO
Method. [Circular No. 768 dated 24.06.1998]
(b) FIFO Method will be applied for each account independently.
(c) When Physical Stock is dematerialized, the date of credit into the Depository Account shall
be considered for the purpose of FIFO Method. But, Indexed Cost of Acquisition shall be
computed on the basis of year of acquisition. [Circular No. 768 of 1998]

33. Sec.45(4): Asset Transfer by firm or AOP/BOI to its Partners

(i) F.M.V. of asset on date of transfer will taken as sale consideration for the firm.
(ii) W.D.V. in the books of accounts of firm is not relevant.
(iii) If assets are depreciable then only STCG or STCL will arise.
(iv) In case of conversion of firm to LLP not treated as Transfer

34. Sec 45(5A): Transfer of Land or Building Under Specified Agreement

When an individual or HUF earns Capital Gains from the t/f of land or building or both under a specified
agreement then such capital gains shall be chargeable to tax in the previous year in which the certificate
of completion for the whole or part of the project is issued by the authority.
Specified Agreement means a registered agreement in which a person owning land or building or both,
agrees to allow another person to develop a real estate project on such land or building or both, in
consideration of a share, being land or building or both in such project, whether with or without payment
of part of the consideration in cash.

35. In case of Intangible asset

Cost of acquisition Cost of Improvement
Goodwill, Patent, Copyright Actual NIL
or right to carry any business.
Loom hours, Rout Permit, Actual Actual
Tenancy right
(i) Goodwill of Profession is not capital asset hence not any capital gain.
(ii) We can't take F.M.V. of 1 April, 2001 as COA whether the asset is purchased or self generated.
 INSTITUTE OF COMMERCE – PIC/INCOME FROM CAPITAL GAINS/PAGE 8

36. Sec.50: Capital Gain in case of transfer of Depreciable assets

(i) When whole block is sold
The difference of sale price & WDV of the block will be chargeable as Short term capital gain or STCL
Depreciation will not chargeable even if WDV is remaining.
(ii) If whole Block is not sold.
If sale price is more than WDV then capital gain will be calculated.
Difference between sale price & WDV will be chargeable as STCG

37. Sec.50A: Cost of acquisition in case of power sectors

COA will be WDV of the assets

38. Sec.50B: Capital gains in respect of slump Sale: Net worth of undertaking will be deemed to be COA &
COI
(i) In this case net worth will be aggregate value of total assets of the undertaking or division as reduced
by the value of liabilities of such undertaking or division as appearing in the books of accounts.
However, any changes in the value of assets on accounts of revaluation of assets shall not be
considered for this purpose
(ii) Aggregate value of total assets undertaking or division –
(a) In case of depreciable assets : written down value of block of assets
(b) Capital gain in respect of which 100% deduction is claimed – nil
(c) For all other assets – book value
Report of chartered Accountant indicating the calculation of Net worth shall be submitted with
return.
 Sec 50B (3): Every assessee, in the case of slump sale, shall furnish in the prescribed form a report of
an accountant as defined in the Explanation below sub-section (2) of section 288 before the specified
date referred to in section 44AB
[FA’20] indicating the computation of the net worth of the undertaking or division, as the case may
be, and certifying that the net worth of the undertaking or division, as the case may be, has been
correctly arrived at in accordance with the provisions of this section.
 INSTITUTE OF COMMERCE – PIC/INCOME FROM CAPITAL GAINS/PAGE 9

Capital Gains on Slump Sale of an Undertaking [Section 50B]

Is the undertaking held for more than 36 months before transfer?

Yes No

Resultant capital gain is LTCG Resultant capital gain is STCG

(No indexation benefit would be available)

L TCG is taxable@ 20% Normal rates of taxation

Computation of capital gains on slump sale

Full value of Consideration (+) Deemed cost of acquisition/cost of Improvement

Net Worth

Value of liabilities of the

Aggregate value of total (-) undertaking appearing in the
assets of the undertaking books of account

In case of depreciable In case of capital assets, In case of other assets

assets where the whole
expenditure has been
allowed u/s 35AD

WDV as per section 43(6)(c) (+) Nil (+) Book value

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Computation of Fair Market Value of Capital Assets for the purposes of section 50B [Rule 11UAE]
As per section 50B(2)(ii), in relation to capital assets being an undertaking or division transferred byway of slump sale,
fair market value of the capital assets as on the date of transfer, calcu lated in the prescribed manner, shall be deemed to
be the full value of the consideration received or accruing as a result of the transfer of such capital asset.
Accordingly, the CBDT has prescribed that, for the purpose of section 50B(2)(ii), the fair market value (FMV) of capital
assets would be the higher of –
FMV 1, being the fair market value of capital assets transferred by way of slump sale; and
FMV 2, being the fair market value of the consideration (monetary and non-monetary)
received or accruing as a result of transfer by way of slump sale

39. Sec.50C: Full value of consideration in case of Trf. of Land or Building or both
If value adopted by stamp valuation Authority is high than actual Sale consideration then it will treated as
sale consideration.
If assessing officer refer this value to valuation officer for valuation and V.O. find the low F.M.V. then that
F.M.V. will treated as sale consideration.
(a) If Date of agreement is different from the date of transfer and whole of part of consideration is
received by way of account payee cheque or bank draft or ECS on or before the date of agreement
then stamp duty value on the date of agreement will be taken as full value of consideration
(b) If Date of agreement is different from the date of transfer but the whole or part of the consideration
has not been received by way of account payee cheque or bank draft or ECS on or before the date of
agreement then stamp duty value on the date of transfer will be taken as value of consideration.
(c) However, if the stamp duty value does not exceed 105% of the sale consideration received then
consideration received will be taken as full value of consideration.
 SECTION 50C- FULL VALUE OF CONSIDERATION – LAND & BUILDING
If value adopted by Stamp Value Authority exceeds 110% of consideration received or accruing, the only
Stamp Value is adopted as FVC otherwise consideration so received shall be FVC.
Transaction which are not registered with Stamp Duty Authority & executed through
Agreement to sell or power of attorney is also included in Sec 50C.
Different Situation in ref to VO Value by VO > SVA C= SVA
Value by VO < SVA but more than C= VO Value
Assessee
Value by VO < than value by C= Assessee Value
Assessee

40. Sec. 50CA: Transfer of Unlisted share

(i) If sale consideration is less than the FMV then FMV will be deemed to sale consideration.
(ii) Where the consideration received or accruing as a result of the transfer by an assessee of a capital
asset, being share of a company other than a quoted share, is less than the fair market value of such
share determined in such manner as may be prescribed, the value so determined shall, for the
purposes of section 48, be deemed to be the full value of consideration received or accruing as a
result of such transfer: Provided that the provisions of this section shall not apply to any
consideration received or accruing as a result of transfer by such class of persons and subject to such
conditions as may be prescribed. [FA’ 20]

41. Sec.50D: If sale consideration cannot determined than F.M.V. on date of transfer will be considered as
sale price.
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42. Sec.51: If any advance money is forfeited by assesses

(v) Forfeited amt. will deducted from COA and then net COA will be indexed.
(vi) If asset acquired before 1 April 2001 and we take FMV of 1 April 2001 as COA then also
deductable whether the amount is forfeited before or after 1 April 2001.
(vii) If asset acquired as per Sec 49(1) then amount forfeited by previous owner will not deducted.
(viii) However w.e.f AY 2015-16(i.e. from 01.04.2014), Advance Money forfeited will be included under the
head Income from Other Sources.

43. Sec.55(2): Cost of Acquisition

In case of Immovable property, IF SDV as on 01.04.2001 is available then FMV cannot exceed Stamp Duty
Value. Cost Inflation Index -301 for PY 20-21
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Exemption of Capital Gain

44. Sec.10(33): Capital gain on transfer of units of unit scheme 1964 (US64) If such transfer took place after
31-3-2002

45. Sec.10(37): Exemption of capital gains on compulsory acquisition of agriculture land situated within
specified urban limits
With a view to mitigate the hardship faced by the farmers whose agricultural land situated in specified
urban limits has been compulsorily acquired, clause (37) exempts the capital gains arising to an Individual
or a HUF from transfer of agricultural land by way of compulsory acquisition.
Such exemption is available where the compensation or the enhanced compensation or consideration, as
the case may be, is received on or after 1.4.2004.
The exemption is available only when such land has been used for agricultural purpose during the
preceding two years by such individual or a parent of his or by such HUF.

46. Sec.54: Long Term Capital Gain on transfer of residential house

(1) House must be long term.
(2) Exemption available to Individual & HUF only.
(3) Capital Gain exceeds Rs. 2 crore
One New residential house must be purchased within 1 year before & 2 year after date of transfer or
constructed within 3 year after date of transfer.
Capital Gain does not exceeds Rs. 2 crore
The assessee i.e., individual of HUF, may at his option,
 Purchase two residential houses in India within 1 year before or 2 years after the date of
transfer (or)
 Construct two residential houses in India within a period of 3 years after the date of transfer.
Where assessee exercises this option to purchase or construct two residential houses in India, he
shall not be subsequently entitled to exercise the option for the same or any other assessment year.
(4) Amount of exemption: Capital gain or investment whichever is lower.
(5) New House must not sold within 3 year from date of purchase.
(6) If sold : earlier allowed exempted amount will deducted from COA of New asset for calculating STCG
on new asset.
(7) If C.G. may not invest in new house up to due date of filing of return then may be deposit into Capital
Gain Accounting Scheme 1988.
(8) If amount withdrawal not spent for specified purpose than taxable in year of withdrawal.
(9) If any amount remain unutilized in A/c than taxable in year in which time expires as LTCG.
(10) Only one house can be purchased.
(11) May construct new floor on existing house.
(12) If only land purchased then no exemption but if land purchased & constructs building on it then
total amount will exempted.
(13) House allotted under Self Finance Scheme of DDA will take as construction.

47. Sec .54B: C.G. on Transfer of agriculture land in urban area

(1) Land must be used by assesses for at least 2 years.
(2) Assesses – individual and HUF.
(3) New agricultural land must be purchased within 2 years after date of transfer (May be Rural or
Urban)
(4) Amount of exemption: Capital gain or investment whichever’s lower.
 INSTITUTE OF COMMERCE – PIC/INCOME FROM CAPITAL GAINS/PAGE 13

(5) New Agriculture land must not sold within 3 year from date of purchase.
(6) If sold : earlier allowed exempted amount will deducted from COA of New asset for calculating STCG
on new asset.
(7) If C.G. may not invest in new land upto due date of filing of return then may be deposit into Capital
Gain Accounting Scheme 1988.
(8) If amount withdrawal not spent for specified purpose than taxable in year of withdrawal.
(9) If any amount remain unutilized in A/c than taxable in year in which time expires as LTCG or STCG as
the original gain was.

48. Sec.54D: Compulsory Acquisition of any land & building being part of a Industrial undertaking
(1) Exemption available for all assesses.
(2) Assets may be long term or short term
(3) Should used in Industrial undertaking for at least 2 years.
(4) New assets should purchase within 3 year for date receipt of initial compensation & new assets
should used for Industrial undertaking.
(5) Amount of Exemption: Up to capital gain invested
(6) Scheme of deposit – Available
(7) New assets should not sale within 3 years.
(8) If sale previously allowed amount will deduct from COA of new assets for calculating STCG on it.

49. Sec. 54 EC: Capital Gain not chargeable on investment in certain bonds
(1) Any assessee
(2) Asset transferred land and building or both (Long Term Capital gain)
(3) Qualifying asset i.e. Asset in which capital gains has to be invested – Bonds of NHAI or RECL or any
other bond notified bond by C.G. (Redeemable after 5 years)
(4) Time limit for purchase or construction should be within 6 months after the date of transfer.
(5) Amount of exemption: Capital gain or amount invested in specified bonds, whichever is lower.
Maximum permissible investment out of capital gain arising in any F.Y. is Rs.50 lakhs, whether such
investment is made in the current F.Y. or Subsequent F.Y. or Both.

50. Sec .54F: C.G. on transfer of any Long Term Capital Asset
(1) Asset must be long term (other than residential)
(2) Available to individual & HUF only.
(3) Any LTCA other than Residential House.
(4) Assessee should not own more than one residential house on the date of transfer. He should not
purchase within 2 years or construct within 3 years after the date of transfer, another residential
house.
(5) One Residential house situated in India
(6) Purchase within 1 year before or 2 years after the date of transfer (Or) Construct within 3 years after
the date of transfer
(7) Cost of new Residential House > Net sale consideration of original asset, entire Capital gain is exempt.
Cost of new Residential House < Net sale consideration of original asset, proportionate capital gain is
exempt.
(8) Long – Term Capital Gain ×
( )

51. Long-term capital assets referred to in section 112A

The cost of acquisition in relation to the long-term capital assets being,
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- equity shares in a company on which STT is paid both at the time of purchase
and transfer or
- unit of equity oriented fund or unit of business trust on which STT is paidat
the time of transfer.
acquired before 1st February, 2018 shall be the higher of
a) cost of acquisition of such asset; and
b) lower of
(a) the fair market value of such asset; and
the full value of consideration received or accruing as a result ofthe transfer of the capital asset

52. REFERENCE TO VALUATION OFFICER[SECTION 55A]

Section 55A provides that the Assessing Officer may refer the valuation of a capital asset
to a Valuation Officer in the circumstances (if value is not accordance with fair market
value or estimate by registered valuer) with a view to ascertaining the fair market value of
the capital asset for the purposes of capital gains -
(i) If the Assessing Officer is of the opinion that the fair market value of the asset
exceeds the value of the asset as claimed by the assessee by more than 15% of the
value of asset as claimed or by more than ` 25,000 of the value of the asset as
claimed by the assessee.

53. TAX ON SHORT TERM CAPITAL GAINS IN RESPECT OF EQUITY SHARES/ UNITS OF AN
EQUITY ORIENTED FUND [SECTION 111A]

(i) Concessional rate of tax in respect of STCG on transfer of certain assets: This section
provides for a concessional rate of tax (i.e. 15%) on the short-term capital gains on
transfer of – equity share, unit of business trust, a unit of equity oriented
fund9above mentioned under section 45(1B)
(ii) Conditions: The conditions for availing the benefit of this concessional rate are –
the transaction of sale of such equity share or unit should be entered into onor after 1.10.2004,
However, short-term capital gains arising from transactions undertaken in foreign
currency on a recognized stock exchange located in an International Financial
Services Centre (IFSC) would be taxable at a concessional rate of 15% even though STT
is not leviable in respect of such transaction.
(iii) Adjustment of Unexhausted Basic Exemption Limit: In case of resident individual
and huf basic exemption not exhausted by other income then can be adjust from
that gains.
(iv) No deduction under Chapter VI-A against STCG taxable under section 111A

54. N LONG TERM CAPITAL GAINS ONCERTAIN ASSETS [SECTION 112A]

(i) Concessional rate of tax in respect of LTCG on transfer of certain assets: In order
to minimize economic distortions and curb erosion of tax base, section 112A
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provides that notwithstanding anything contained in section 112, a concessional

rate of tax @10% will be leviable on the long-term capital gains exceeding `
1,00,000 on transfer of assets mentioned under sec112A.
(ii) Conditions: The conditions for availing the benefit of this concessional rate are –
(a) In case of equity share in a company, STT has been paid on acquisition and
transfer of such capital asset
(b) In case of unit of an equity oriented fund or unit of business trust, STT has
been paid on transfer of such capital asset.
(iii) Adjustment of Unexhausted Basic Exemption Limit No benefit of rebate under
section 87A against LTCG taxable under section 112A