ExemptionsExemptions

Computation of capital gain

Computation of capital gain

Transfer includes and excludes

Transfer includes and excludes

Capital assets & its types

Capital assets & its types

Chargeability Chargeability

Capital Gains

Capital Gains

CAPITAL GAINCAPITAL GAIN1.CHARGEABILITY1.CHARGEABILITY

ConditionsConditions1.1. There should be a There should be a capital assetcapital asset

2.2. The capital asset is The capital asset is transferredtransferred by the by the assesseeassessee

3.3. Such transfer takes place during the Such transfer takes place during the Previous Previous yearyear

4.4. Any profit or gain arisesAny profit or gain arises as a result of as a result of transfertransfer

5.5. Such profit or gain Such profit or gain is not exemptis not exempt from tax from tax under sec. 54,54B,54D,54EC,54F,54G and under sec. 54,54B,54D,54EC,54F,54G and 54GA54GA

2.Capital Asset2.Capital AssetMeans Property of Means Property of any kind heldany kind held by an assessee, by an assessee, whether or not connected with his business or whether or not connected with his business or profession. But it profession. But it excludesexcludes

1.1. Any stock – in – tradeAny stock – in – trade2.2. Personal effectsPersonal effects3.3. Agricultural land in IndiaAgricultural land in India4.4. 6 ½ % God Bonds,1977 or 7% Gold Bonds, 1980 or 6 ½ % God Bonds,1977 or 7% Gold Bonds, 1980 or

National Defense Gold Bonds, 1980 issued by the National Defense Gold Bonds, 1980 issued by the CG.CG.

5.5. Special Bearer Bonds, 1991Special Bearer Bonds, 19916.6. Gold Deposit Bonds issued under Gold Deposit Gold Deposit Bonds issued under Gold Deposit

Scheme, 1999Scheme, 1999

Arun Sunny V. CIT(2009)Arun Sunny V. CIT(2009) - - Property transferred must be Property transferred must be a capital asset a capital asset on the date of transferon the date of transfer. It is not . It is not

necessary that it should have been capital asset also onnecessary that it should have been capital asset also on the date of its acquisition by the assessee. the date of its acquisition by the assessee.

Stock in trade is not a capital assets - This is becauseStock in trade is not a capital assets - This is because of the fact that any surplus arising on sale or transfer ofof the fact that any surplus arising on sale or transfer of stock in trade etc., is chargeable to tax stock in trade etc., is chargeable to tax as business as business income under sec. 28income under sec. 28

Personal effects does not include jewellery, Personal effects does not include jewellery, archaeological collections, drawings, paintings, archaeological collections, drawings, paintings, sculptures, or any work of art.sculptures, or any work of art.

Rana Hemant Singhji V. CITRana Hemant Singhji V. CIT – Personal effects must be – Personal effects must be intended for personal and household use. If not those intended for personal and household use. If not those are treated as capital assets.are treated as capital assets.

Agricultural land is a capital asset if it situated in any Agricultural land is a capital asset if it situated in any area within the jurisdiction of a municipality or a area within the jurisdiction of a municipality or a cantonment board having a population of 10000 or morecantonment board having a population of 10000 or more

OR in any notified areaOR in any notified area

3.Types of capital 3.Types of capital assetsassetsCapital assets

Short Term Capital asset

Long Term Capital Asset

Capital assets held by Assessee for not more

Than 36 months prior toIts date of transfer

Capital assets held by Assessee for more

Than 36 months prior toIts date of transfer

For certain Capital assets 36 months Is replaced

with 12 months

Equity or preference shares in a Equity or preference shares in a companycompany

Shares may or may not be quotedShares may or may not be quoted

Securities (Debentures, Govt. Securities (Debentures, Govt. Securities)Securities)

Should be quoted in a recognized Should be quoted in a recognized stock exchange in Indiastock exchange in India

Units in UTIUnits in UTI May or May not be quotedMay or May not be quoted

Units of Mutual FundsUnits of Mutual Funds May or May not be quotedMay or May not be quoted

Zero Coupon BondsZero Coupon Bonds May or May not be quotedMay or May not be quoted

Those assets areThose assets are

IF those assets are held for more than 12 months immediately IF those assets are held for more than 12 months immediately prior to its transfer then it is a long term capital assetprior to its transfer then it is a long term capital asset

Perod of HoldingPerod of Holding : - Normally Period of holding is : - Normally Period of holding is calculated from the date of acquisition of capital asset to calculated from the date of acquisition of capital asset to the date of transfer. However, in certain cases period of the date of transfer. However, in certain cases period of holding isholding is

When capital asset is acquired by When capital asset is acquired by way of gift, will, inheritance etc., way of gift, will, inheritance etc.,

The period for which asset was The period for which asset was held by Previous owner should be held by Previous owner should be includedincluded

Right SharesRight Shares From the date of Allotment of Right From the date of Allotment of Right sharesshares

Bonus sharesBonus shares From the date of Allotment of Bonus From the date of Allotment of Bonus sharesshares

Flat in co operative societyFlat in co operative society From the date of allotment of shares in From the date of allotment of shares in the societythe society

Sweat equity sharesSweat equity shares From the date of allotment of shares to From the date of allotment of shares to employeesemployees

CIT Vs. Sri Sekhar Gupta CIT Vs. Sri Sekhar Gupta : - Calcutta bench of : - Calcutta bench of the tribunal held that the land is an the tribunal held that the land is an independent and identifiable capital asset and it independent and identifiable capital asset and it continues to remain as an identifiable capital continues to remain as an identifiable capital asset even after construction of the building. asset even after construction of the building. Capital gain can be separately calculated for Capital gain can be separately calculated for land and building after splitting up the sale land and building after splitting up the sale consideration for the land and building.consideration for the land and building.

Transfer of Depreciable Asset Transfer of Depreciable Asset : - In the case of , : - In the case of , capital gain (if any) is taken as short term capital gain (if any) is taken as short term capital gain, irrespective of period of holding.capital gain, irrespective of period of holding.

4. Transfer 4. Transfer Transfer, in relation to a capital asset, includesTransfer, in relation to a capital asset, includes

Includes Sale of Capital assetIncludes Sale of Capital asset : - Essentials of a sale : - Essentials of a sale are are 1. Mutual agreement 1. Mutual agreement 2. Competent parties2. Competent parties3. a money consideration3. a money consideration4. Transfer of absolute or general property 4. Transfer of absolute or general property If aforesaid conditions are not satisfied there is no If aforesaid conditions are not satisfied there is no sale.sale.

Includes ExchangeIncludes Exchange : - CIT V. Rasiklal Maneklal(HUF) : - CIT V. Rasiklal Maneklal(HUF)(1989) It (1989) It was held that there must be a was held that there must be a mutual transfermutual transfer of of ownership of one thing for ownership of another.ownership of one thing for ownership of another.

Include Compulsory acquisition of assetInclude Compulsory acquisition of asset : Taxable : Taxable when the compensation is received for the first time not on when the compensation is received for the first time not on the date of transfer.the date of transfer.

Include Conversion of capital asset into stock in tradeInclude Conversion of capital asset into stock in trade Include Redemption of zero coupon bondsInclude Redemption of zero coupon bonds Transfer includes giving possession of immovable Transfer includes giving possession of immovable

possession of immovable properties under part possession of immovable properties under part performance of a contractperformance of a contract

Transfer includes any transaction which has the effect Transfer includes any transaction which has the effect of transferring an immovable property :of transferring an immovable property :

Conditions Conditions

1. 1. The transferor is a member of co operative The transferor is a member of co operative society/member/AOPsociety/member/AOP

2. By virtue of membership he has been allotted an 2. By virtue of membership he has been allotted an immovable property or he will be allotted an immovable immovable property or he will be allotted an immovable property.property.

3.The membership right is transferred3.The membership right is transferred

SecSec Transactions not treated as transfer Transactions not treated as transfer (Subject to certain conditions)(Subject to certain conditions)

What is the cost in the What is the cost in the hands of transfereehands of transferee

If the transferee If the transferee subsequently subsequently transfer the asset, transfer the asset, whether period of whether period of holding by the holding by the previous owner previous owner should be should be includedincluded

46(1)46(1) Distribution of assets in kind by Distribution of assets in kind by company to its shareholders at the time company to its shareholders at the time of liquidationof liquidation

Market value of he asset Market value of he asset on the date of distributionon the date of distribution

YesYes

47(i)47(i) Distribution of capital asset on total or Distribution of capital asset on total or partial partition of HUFpartial partition of HUF

Cost to previous ownerCost to previous owner YesYes

47(ii)47(ii) Transfer of Capital asset under a gift or Transfer of Capital asset under a gift or willwill

Cost to previous ownerCost to previous owner YesYes

47(v)47(v) Transfer of CA by a 100% subsidiary Transfer of CA by a 100% subsidiary company to its Holding companycompany to its Holding company

Cost to previous ownerCost to previous owner YesYes

47(vi)47(vi) Transfer of CA in the scheme of Transfer of CA in the scheme of amalgamationamalgamation

Cost to previous ownerCost to previous owner YesYes

47(vib)47(vib) Transfer in a demerger of a CA by the Transfer in a demerger of a CA by the demerged company to resulting demerged company to resulting companycompany

Cost to previous ownerCost to previous owner YesYes

47(vii)47(vii) Allotment of shares in amalgamated Allotment of shares in amalgamated company in lieu of shares held in company in lieu of shares held in amalgamating companyamalgamating company

Cost of shares in the Cost of shares in the amalgamating companyamalgamating company

YesYes

47(viia)47(viia) Transfer of a capital asset (being foreign Transfer of a capital asset (being foreign currency convertible bonds or GDR) by a currency convertible bonds or GDR) by a non – resident to another Non – residentnon – resident to another Non – resident

NoNo

47(x)47(x) Transfer by way of conversion of bonds or Transfer by way of conversion of bonds or debentures into sharesdebentures into shares

Cost of shares would be Cost of shares would be cost of bonds/debenturescost of bonds/debentures

NoNo

47(xa)47(xa) Transfer by way of conversion of bonds into Transfer by way of conversion of bonds into shares or debentures of any company shares or debentures of any company

Cost of Cost of shares/debentures would shares/debentures would be cost of original bondsbe cost of original bonds

NoNo

47(xii)47(xii) Transfer of land by a sick industrial company Transfer of land by a sick industrial company which is managed by its workers co operative which is managed by its workers co operative

NoNo

47(xiii)47(xiii) Transfer of a capital asset by a firm to a company Transfer of a capital asset by a firm to a company in the case of conversion of firm into company in the case of conversion of firm into company

NoNo

47(xiv)47(xiv) Transfer of a capital asset to a company in the Transfer of a capital asset to a company in the case of conversion of Proprietary concern into case of conversion of Proprietary concern into company company

NoNo

47(xv)47(xv) Transfer involved in a scheme of lending of Transfer involved in a scheme of lending of securitiessecurities

NoNo

47(xvi)47(xvi) Transfer of capital asset in a transaction of Transfer of capital asset in a transaction of reverse mortgage made under a scheme notified reverse mortgage made under a scheme notified by the Government.by the Government.

The aforesaid transactions are not recognized as transfer for the The aforesaid transactions are not recognized as transfer for the purpose of Sec.45. Therefore any profit or gain arising there purpose of Sec.45. Therefore any profit or gain arising there from cannot be recognized as income or any loss arising there from cannot be recognized as income or any loss arising there from cannot be set off against the other income of assessee.from cannot be set off against the other income of assessee.

The aforesaid transactions are not recognized as transfer for theThe aforesaid transactions are not recognized as transfer for the purpose of Sec.45. Therefore any profit or gain arising there from purpose of Sec.45. Therefore any profit or gain arising there from cannot be recognized as income or any loss arising there from cannot be recognized as income or any loss arising there from cannot be set off against the other income of assessee.cannot be set off against the other income of assessee.

5.Computation of Capital Gain5.Computation of Capital Gain

Computation of CG depends upon the nature of capital Computation of CG depends upon the nature of capital asset transferred. If short term capital Asset is asset transferred. If short term capital Asset is transferred Short term capital gain will arise. If Long term transferred Short term capital gain will arise. If Long term asset is transferred Long term capital gain will ariseasset is transferred Long term capital gain will arise

1. Find out full value of consideration1. Find out full value of consideration 1. Find out full value of consideration1. Find out full value of consideration

2. Deduct the following2. Deduct the following

A. Expenditure incurred in respect of that A. Expenditure incurred in respect of that transfertransfer

B. Cost of acquisitionB. Cost of acquisition

C. Cost of ImprovementC. Cost of Improvement

2. Deduct the following2. Deduct the following

A. Expenditure incurred in respect of that A. Expenditure incurred in respect of that transfertransfer

B. Indexed Cost of acquisitionB. Indexed Cost of acquisition

C. Indexed Cost of ImprovementC. Indexed Cost of Improvement

3. From the result sum deduct the exemption 3. From the result sum deduct the exemption provided U/s 54B, 54D, 54G and 54GAprovided U/s 54B, 54D, 54G and 54GA

3. From the result sum deduct the exemption 3. From the result sum deduct the exemption provided U/s 54, 54B, 54D, 54EC, 54F, 54G provided U/s 54, 54B, 54D, 54EC, 54F, 54G and 54GAand 54GA

The Balance is Short term Capital GainThe Balance is Short term Capital Gain The Balance is Long term Capital GainThe Balance is Long term Capital Gain

Computation of Short term CGComputation of Short term CG Computation of Long term CGComputation of Long term CG

Capital Gains exempt from tax under Sec.10Capital Gains exempt from tax under Sec.10

A. A. CG on compulsory acquisition of urban agriculture landCG on compulsory acquisition of urban agriculture land : - For : - For individuals and HUF s and if it used by the assessee for agricultureindividuals and HUF s and if it used by the assessee for agriculture purpose for at least 2 years immediately prior to date of transfer.purpose for at least 2 years immediately prior to date of transfer.

B. B. Long term CG on Transfer of securities not chargeable to tax in Long term CG on Transfer of securities not chargeable to tax in cases covered by Transaction Tax. cases covered by Transaction Tax. : - : -

a. For all taxpayers, only long term capital asseta. For all taxpayers, only long term capital asset

b. At the time of transfer, the transaction is chargeable to . b. At the time of transfer, the transaction is chargeable to . securities transaction taxsecurities transaction tax

Cost of acquisitionCost of acquisition : - Cost of acquisition is the value for which it : - Cost of acquisition is the value for which it was acquired by the assessee. Expenses of capital nature of was acquired by the assessee. Expenses of capital nature of completing or acquiring the title to the property are includible in the completing or acquiring the title to the property are includible in the cost of acquisition.cost of acquisition.

Meccane Industries Ltd. V. CIT Meccane Industries Ltd. V. CIT : - Conversion of agriculture land : - Conversion of agriculture land into non-agriculture land : - Where when land was acquired forinto non-agriculture land : - Where when land was acquired for agriculture purpose but later it was converted into non agriculture agriculture purpose but later it was converted into non agriculture purpose. The cost of acquisition is to be taken as cost of acquisition purpose. The cost of acquisition is to be taken as cost of acquisition of the agricultural land not the notional cost as on the date the land of the agricultural land not the notional cost as on the date the land is is put to Non agricultural use.put to Non agricultural use.

Notional Cost of acquisition Notional Cost of acquisition : - In the cases below cost of : - In the cases below cost of acquisition is taken at a notional figureacquisition is taken at a notional figure

Different situationsDifferent situations Notional cost of acquisitionNotional cost of acquisition

1. Asset received by a member on 1. Asset received by a member on liquidation of the companyliquidation of the company

FMV of such asset on the date of FMV of such asset on the date of distributiondistribution

2. Allotment of shares in an 2. Allotment of shares in an amalgamated Indian company to amalgamated Indian company to the Shareholders of amalgamating the Shareholders of amalgamating company In a scheme of company In a scheme of amalgamation of the two amalgamation of the two companiescompanies

Cost of acquisition of shares in the Cost of acquisition of shares in the amalgamating companyamalgamating company

3. Depreciable assets covered by 3. Depreciable assets covered by Sec. 50Sec. 50

OB of the block of assets on the first of OB of the block of assets on the first of the previous year + actual cost of the the previous year + actual cost of the assets acquired during the year which assets acquired during the year which fall within the same blockfall within the same block

4.Undertaking/division acquired by 4.Undertaking/division acquired by way of slump sale as covered way of slump sale as covered under sec.50Bunder sec.50B

Net worth of such undertakingNet worth of such undertaking

5. New asset acquired for claiming 5. New asset acquired for claiming exemption U/S 54, 54B,54D,54G or exemption U/S 54, 54B,54D,54G or 54GA if it is transferred within 3 54GA if it is transferred within 3 YearsYears

Actual cost of acquisition (-) Exemption Actual cost of acquisition (-) Exemption claimed under these sectionsclaimed under these sections

Different situationsDifferent situations Notional cost of acquisitionNotional cost of acquisition

6. Right shares6. Right shares Amount actually paid by assesseeAmount actually paid by assessee

7. Right Entitlement7. Right Entitlement NilNil

8. Bonus shares8. Bonus shares If allotted before April 1 1981 : FMVIf allotted before April 1 1981 : FMV

Otherwise : NilOtherwise : Nil

9. Any other Capital Asset9. Any other Capital Asset

A.A. If it became the property of If it became the property of the assessee before Apr 1the assessee before Apr 1stst 1981 by gift, will, etc., 1981 by gift, will, etc.,

B.B. A. If it became the property of A. If it became the property of the assessee before Apr 1the assessee before Apr 1stst 1981 1981

C.C. If it became the property of If it became the property of the assessee after Apr 1the assessee after Apr 1stst 1981 by gift, will, etc1981 by gift, will, etc

D.D. If it became the property of If it became the property of the assessee after Apr 1the assessee after Apr 1stst 19811981

Cost of acquisition to the previous Cost of acquisition to the previous owner or FMV as on Apr 1 1981, owner or FMV as on Apr 1 1981, whichever is morewhichever is more

Cost of acquisition or FMV as on Apr 1 Cost of acquisition or FMV as on Apr 1 1981, whichever is more1981, whichever is more

Cost of acquisition to the previous Cost of acquisition to the previous owner owner

Cost of acquisitionCost of acquisition

Conversion of Capital asset in to stock in trade Sec.45(2Conversion of Capital asset in to stock in trade Sec.45(2).). 1. The notional profit arising from transfer by way of conversion of1. The notional profit arising from transfer by way of conversion of capital asset into sock in trade is chargeable to tax in the year in capital asset into sock in trade is chargeable to tax in the year in which stock in trade is sold.which stock in trade is sold.

CIT V. Crest Hotels Ltd. (2001)(mum.) CIT V. Crest Hotels Ltd. (2001)(mum.) : - If stock in trade is sold in : - If stock in trade is sold in parts in different years, tax on conversion of capital asset into stock parts in different years, tax on conversion of capital asset into stock in trade as per sec. 45(2), can be said to arise in parts in different in trade as per sec. 45(2), can be said to arise in parts in different years and not in one year in which last of stock in trade is sold.years and not in one year in which last of stock in trade is sold.

For the purpose of computing the CG in such cases, the FMV of For the purpose of computing the CG in such cases, the FMV of the Capital asset on the date on which it was converted or treated as the Capital asset on the date on which it was converted or treated as stock in trade shall be deemed to be the full value of the stock in trade shall be deemed to be the full value of the consideration received. consideration received.

6. Computation of CG in certain special cases6. Computation of CG in certain special cases

Transfer of capital asset by a partner to a firmTransfer of capital asset by a partner to a firm : : - - Conditions : -Conditions : - 1. A person is a partner in a firm or he becomes a partner in a firm1. A person is a partner in a firm or he becomes a partner in a firm 2. He transfers a capital asset2. He transfers a capital asset 3. The transfer may be by way of his capital contribution or . 3. The transfer may be by way of his capital contribution or . otherwiseotherwise

If above conditions are satisfied then If above conditions are satisfied then

Chargeable to tax in the previous year in which such transfer takes Chargeable to tax in the previous year in which such transfer takes place.place.

Full consideration is the amount recorded in the books as value of Full consideration is the amount recorded in the books as value of capital asset.capital asset.

Transfer of capital asset on compulsory acquisition of an Transfer of capital asset on compulsory acquisition of an assetasset : : - -

What is the sale considerationWhat is the sale consideration : - : - Initial compensation is taken as full value of sale considerationInitial compensation is taken as full value of sale consideration In which year it is chargeable to tax In which year it is chargeable to tax : -: - In the previous year in which initial compensation or part thereof In the previous year in which initial compensation or part thereof is received.is received.

CG when insurance Claim is receivedCG when insurance Claim is received : - : -Vania Sild Mills(p.) Ltd. V.CIT(1991) SC held that insurance claim Vania Sild Mills(p.) Ltd. V.CIT(1991) SC held that insurance claim

received on account of destruction of asset is not chargeable to tax as received on account of destruction of asset is not chargeable to tax as ““destruction” does not amount to transfer. However, judgment has been destruction” does not amount to transfer. However, judgment has been nullified to some extent by inserting Sec.45(1A)nullified to some extent by inserting Sec.45(1A)

SEC 45(1A) : - Conditions SEC 45(1A) : - Conditions 1.1. Compensation is received because of destruction of any Capital asset.Compensation is received because of destruction of any Capital asset.2.2. The damage or destruction is a result of four categories of The damage or destruction is a result of four categories of

circumstances a. Flood etc., b. Riot or civil disturbances. (iii) Accidental circumstances a. Flood etc., b. Riot or civil disturbances. (iii) Accidental fire explosion (iv) Action by an enemy.fire explosion (iv) Action by an enemy.

Then Any profit or gain araised from such receipt then it is Then Any profit or gain araised from such receipt then it is chargeable to CG.chargeable to CG.

In the Previous year in which such money or asset is receivedIn the Previous year in which such money or asset is received

Capital Gain in the case of Land and Building Sec. 50C.Capital Gain in the case of Land and Building Sec. 50C.Conditions Conditions A. There is a transfer of land and buildingA. There is a transfer of land and buildingB. The sale consideration is less than the value adopted by any authority B. The sale consideration is less than the value adopted by any authority of state government for the purpose of payment of stamp duty. of state government for the purpose of payment of stamp duty. Navneet Kumar Thakkar V. ITO(2008) Navneet Kumar Thakkar V. ITO(2008) The Jodhpur Bench of the ITAT The Jodhpur Bench of the ITAT held that held that unless unless property transferred has been registered by a sale deed property transferred has been registered by a sale deed and for that purpose value has been assessed and stamp duty has been and for that purpose value has been assessed and stamp duty has been paid by parties, paid by parties, sec. 50C can not come into operation.sec. 50C can not come into operation.If a property is transferred under a power of attorney transaction and value If a property is transferred under a power of attorney transaction and value has not been assessed for the purpose of stamp duty, Sec. 50C has no has not been assessed for the purpose of stamp duty, Sec. 50C has no application.application.

If above conditions are satisfied thenIf above conditions are satisfied then

Different situationDifferent situation Full value of consideration Full value of consideration for the purpose of CGfor the purpose of CG

Where the assessee Where the assessee accepts the value adopted accepts the value adopted by stamp duty authorityby stamp duty authority

Value adopted by stamp duty Value adopted by stamp duty authority is taken as full value authority is taken as full value of considerationof consideration

Where the assessee has Where the assessee has disputed value adopted by stamp disputed value adopted by stamp duty authority under the stamp duty authority under the stamp Act.Act.

Where the assessee claims that Where the assessee claims that value adopted by stamp duty value adopted by stamp duty authority is more than the fair authority is more than the fair market valuemarket value

The Stamp duty valuation as finally The Stamp duty valuation as finally accepted for stamp duty purpose is accepted for stamp duty purpose is taken as full value of considerationtaken as full value of consideration

FMV determined by the department VO FMV determined by the department VO (if it is less than the stamp duty valuation) (if it is less than the stamp duty valuation) is taken as full value of considerationis taken as full value of considerationStamp duty valuation (If the FMV Stamp duty valuation (If the FMV determined by the department VO. Is determined by the department VO. Is more then the stamp duty valuation) is more then the stamp duty valuation) is taken as Full value of consideration. taken as Full value of consideration.

Reference to Valuation officer : - Sec. 55AReference to Valuation officer : - Sec. 55A

With a view to ascertain FMV of the CA, AO may refer the mater to VO, in With a view to ascertain FMV of the CA, AO may refer the mater to VO, in the following grounds : -the following grounds : -

1. Where the value of the asset as claimed by the assessee is in 1. Where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, but the AO is of accordance with the estimate made by a registered valuer, but the AO is of the opinion that the value so claimed is less than its FMVthe opinion that the value so claimed is less than its FMV

2. Where the AO is of the opinion that FMV of the asset exceeds the value 2. Where the AO is of the opinion that FMV of the asset exceeds the value of the asset by more than 25000 or 15% of value claimed by assessee, of the asset by more than 25000 or 15% of value claimed by assessee, which ever is more.which ever is more.

3. Where AO is of the opinion that, having regard to nature of an asset, it is 3. Where AO is of the opinion that, having regard to nature of an asset, it is necessary to make a reference to the VO.necessary to make a reference to the VO.

Different QuestionsDifferent Questions Sec 54Sec 54 Sec 54BSec 54B Sec 54DSec 54D

Who can claim exemptionWho can claim exemption Individual/HUFIndividual/HUF IndividualIndividual Any personsAny persons

Which Capital AssetWhich Capital Asset Long TermLong Term Short term/Short term/

Long TermLong Term

Long TermLong Term

Which specific asset is Which specific asset is eligible for Exemptioneligible for Exemption

A Residential house A Residential house propertyproperty

Agricultural land if it was used Agricultural land if it was used by the individual or his parents by the individual or his parents for agricultural purpose for at for agricultural purpose for at lease 2 years immediately lease 2 years immediately prior to transferprior to transfer

Land or Building forming Land or Building forming part of an industrial part of an industrial undertaking which is undertaking which is compulsory acquired by the compulsory acquired by the Govt.Govt.

Which asset the tax Which asset the tax

Payer should acquirePayer should acquire

To get the benefit ofTo get the benefit of

ExemptionExemption

Residential house propertyResidential house property Agricultural LandAgricultural Land Land or building forLand or building for

Industrial purposeIndustrial purpose

Time LimitTime Limit From the date of transfer/ in From the date of transfer/ in case of Compulsory case of Compulsory acquisition from the date of acquisition from the date of receipt of compensation receipt of compensation

From the date of transfer of From the date of transfer of agricultural landagricultural land

From the date of receipt of From the date of receipt of compensationcompensation

Time limit for acquiringTime limit for acquiring PurchasingPurchasing 1 year 1 year backward or 2 years backward or 2 years forward. Construction : forward. Construction : 3 years forward 3 years forward

2 years forward2 years forward 3 years forward3 years forward

How much is exemptHow much is exempt Investment in the new Investment in the new asset OR CG Which ever is asset OR CG Which ever is lowerlower

Investment in the new asset Investment in the new asset OR CGOR CG

Investment in the new asset Investment in the new asset OR CGOR CG

Whether the scheme of Whether the scheme of deposit is availabledeposit is available

YesYes YesYes YesYes

Different QuestionsDifferent Questions Sec 54ECSec 54EC Sec 54FSec 54F

Who can claim exemptionWho can claim exemption Any personAny person Individual/Individual/

HUFHUF

Which Capital AssetWhich Capital Asset Long TermLong Term Long TermLong Term

Which specific asset is eligible for Which specific asset is eligible for ExemptionExemption

Any Long term Capital Any Long term Capital

AssetAsset

Any LTCA (other than a residential house Any LTCA (other than a residential house Property) provided on the date of transfer Property) provided on the date of transfer the taxpayer does not own more than one the taxpayer does not own more than one residential house propertyresidential house property

Which asset the tax Payer should Which asset the tax Payer should acquire to get the benefit of acquire to get the benefit of ExemptionExemption

Bonds of NHAI or RECBonds of NHAI or REC A Residential house propertyA Residential house property

Time LimitTime Limit From the date of transfer of From the date of transfer of LTCA but in the case of LTCA but in the case of Compulsory acquisition from Compulsory acquisition from the date of receipt of the date of receipt of compensationcompensation

From the date of transfer of CA but in the From the date of transfer of CA but in the case of Compulsory acquisition from the case of Compulsory acquisition from the date of receipt of compensationdate of receipt of compensation

Time limit for acquiringTime limit for acquiring 6 Months forward6 Months forward Purchasing 1 year backward or 2 years Purchasing 1 year backward or 2 years forward. Construction : 3 years forwardforward. Construction : 3 years forward

How much is exemptHow much is exempt Investment in the new asset Investment in the new asset OR CG Which ever is lowerOR CG Which ever is lower

Investment in the new asset/net SC*CGInvestment in the new asset/net SC*CG

Whether the scheme of deposit is Whether the scheme of deposit is availableavailable

NoNo YesYes

Different QuestionsDifferent Questions 54G54G Sec 54GASec 54GA

Who can claim exemptionWho can claim exemption Any personAny person Any personAny person

Which Capital AssetWhich Capital Asset Short term/Short term/

Long TermLong Term

Short term/Short term/

Long TermLong Term

Which specific asset is eligible for Which specific asset is eligible for ExemptionExemption

Land, Building, Plant or Machinery in Land, Building, Plant or Machinery in order to shift an industrial order to shift an industrial undertaking from urban area to rural undertaking from urban area to rural areaarea

Land, Building, Plant or Land, Building, Plant or Machinery in order to shift an Machinery in order to shift an industrial undertaking from industrial undertaking from urban area to any SEZurban area to any SEZ

Which asset the tax Payer should Which asset the tax Payer should acquire To get the benefit of acquire To get the benefit of ExemptionExemption

Land, Building, plant or machinery in Land, Building, plant or machinery in order to shift an undertaking to rural order to shift an undertaking to rural areaarea

Land, Building, plant or Land, Building, plant or machinery in order to shift an machinery in order to shift an undertaking to SEZundertaking to SEZ

Time LimitTime Limit From the date of transferFrom the date of transfer From the date of TransferFrom the date of Transfer

Time limit for acquiringTime limit for acquiring 1 Year backward or 3 years forward1 Year backward or 3 years forward 1 Year backward or 3 years 1 Year backward or 3 years forwardforward

How much is exemptHow much is exempt Investment in the new asset OR CG Investment in the new asset OR CG Which ever is lowerWhich ever is lower

Investment in the new asset OR Investment in the new asset OR CG Which ever is lowerCG Which ever is lower

Whether the scheme of deposit is Whether the scheme of deposit is availableavailable

YesYes YesYes

INCOME TAX RATES INCOME TAX RATES

Capital assetCapital asset If transaction is If transaction is covered by STT at covered by STT at the time of transferthe time of transfer

Long Long ShortShort

Term - Term - TermTerm

If it is not If it is not covered by STT covered by STT

Long term Long term STSTWithout WithWithout With

Indexa IndexaIndexa Indexa

Tion tionTion tion

US – 64US – 64 0% 0%0% 0% 0% 0% 0% 0% 0%0%

Units( EquityUnits( Equity

Oriented)Oriented)0% 15%0% 15% 10% 20% 10% 20% NormalNormal

Units(others)Units(others) NA NANA NA 10% 20% 10% 20% NormaNormall

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