CONTENTS
| Chapter 1 : Introduction | 1 |
| Justification of Capital Gains Tax | 1 |
| Background of introduction of Capital Gains-tax | 1 |
| Abolition of capital gains-tax | 2 |
| Prof. Nicholos Kaldor’s recommendation | 2 |
| Residential status for the purpose of taxation of Capital gain | 4 |
| Capital gains are chargeable on accrual basis | 4 |
| Mercantile method of accounting has to be followed | 4 |
| Capital gain is part of income though under separate head | 5 |
| One deeming section cannot be extended by importing another deeming section | 5 |
| Capital gains in case of erstwhile State Ruler | 5 |
| Chapter 2 : Essential conditions for taxation of profits under the head ‘Capital Gains’ | 10 |
| (1) There must be a capital asset which is owned by the assessee as defined in section 2(14) | 10 |
| (2) The capital asset must have been transferred by the assessee during the previous year | 11 |
| (3) There must be profits and gains as a result of such transfer, which will be known as capital gain | 11 |
| (4) Such capital gain should not be exempt under section 54, 54B,54D, 54EC, 54EE, 54F, 54G, 54GA or 54GB | 11 |
| Chapter 3 : “Capital asset” means | 12 |
| Existence of a capital asset on the date of transfer in the hands of transferor is essential | 14 |
| Property of any kind is a capital asset | 14 |
| Property also means the right, title or interest in it | 15 |
| Not treated as capital asset | 15 |
| Assets can never be personal effects and treated as a capital asset[Exception] | 16 |
| Chapter 4 : Transfer in relation to a capital asset | 31 |
| (i) Sale | 32 |
| (ii) Exchange | 33 |
| (iii) Relinquishment of the assets | 35 |
| (iv) Extinguishment of any rights in an asset | 35 |
| (v) Compulsory acquisition as asset under any law[Section 2(47)(iii)] | 36 |
| (vi) Personal effects converted into stock-in-trade[Section 2(47)(iv)] | 36 |
| (vii) Maturity or redemption of a Zero Coupon Bond[Section 2(47)(iva)] | 37 |
| (viii)Allowing possession of immovable properties under part performance of a contract [Section 2(47)(v)] | 37 |
| (ix) Any transaction which has the effect of transferring an immovable property (Membership of housing society,company, etc.) [Section 2(47)(vi)] | 38 |
| (x) Transfer when complete and effective | 39 |
| Chapter 5 : Scope of deemed transfer for taxing capital gains | 47 |
| Rule laid down by section 53A of Transfer of Property Act, 1882 | 48 |
| Difference between English Law and Section 53A of Transfer of Property Act, 1882 Regarding Doctrine of Part Performance | 48 |
| Capital gains are not taxed until the property is actually transferred in accordance with the agreement | 50 |
| Chapter 6 : Period of holding | 61 |
| Holding Period as Asset to be considered [Holding need not be as capital asset] | 69 |
| Calculation of period of holding | 69 |
| Previous owner means the last previous owner | 70 |
| Period of holding of Conversion of Stock-in-Trade into Capital Asset shall be reckoned from the date of conversion or treatment | 70 |
| Holding by the Firm and Partner | 70 |
| Chapter 7 : Chargeability of capital gains [Section 45] | 76 |
| Basis of charge (Section 45) | 76 |
| (i) There should be a capital assets [Section 2(14)] | 76 |
| Property of any kind is wide term and includes all | 76 |
| (ii) The capital asset is transferred by the assessee [Section 2(47)] | 76 |
| Year of chargeability of gains | 77 |
| Capital gain or Business income | 77 |
| Chapter 8 : Any profits or gains arising from transfer of a capital asset [Section 45(1)] | 86 |
| When section 45(1) is attracted | 86 |
| Year of taxability | 87 |
| Full value of consideration | 87 |
| Chapter 9 : Capital gains when insurance is received[Section 45(1A)] | 94 |
| When section 45(1A) is attracted | 95 |
| When section 45(1A) is not applicable | 95 |
| Nature of transaction | 96 |
| Period of holding | 96 |
| Capital Gains assessable in the hands of | 96 |
| Year of taxability - in the year of receipt of claim | 96 |
| Full value of consideration for the purpose of section 48 | 96 |
| Chapter 10 : Taxation of proceeds of high premium unit linked insurance policy (ULIP) [Section 45(1B)] | 101 |
| Rule to compute capital gains on sum received from ULIPs not exempt under section 10(10D) | 103 |
| Chapter 11 : Capital gains on conversion of capital assets into stock-in-trade [Section 45(2)] | 105 |
| Background | 105 |
| Relevant provisions | 106 |
| Nature of transaction | 106 |
| Year of transfer | 106 |
| Capital Gains assessable in the hands of | 106 |
| Year in which chargeable | 106 |
| Capital Gain shall be computed in the year when such converted asset is sold | 106 |
| lndexation of cost of acquisition & improvement shall be done till the year of conversion | 106 |
| There must be a capital asset | 107 |
| Fair Market Value of the inventory | 108 |
| Cost of acquisition | 108 |
| Period of holding of such capital asset | 467 |
| Treated as business income | 108 |
| Business income also to be calculated in the year of sale | 108 |
| Essential conditions | 108 |
| Computation of capital gain | 109 |
| Chapter 12 : Chargeability of capital gain on transfer of security by depository [Section 45(2A)] | 115 |
| Definitions as per section 2(1) of the Depositories Act, 1996 | 115 |
| Year of taxability - In the year of transfer | 116 |
| Essential conditions | 116 |
| Rate of Tax | 116 |
| Nature of transaction (Particulars of transfer) | 117 |
| Capital Gains assessable in the hands of | 117 |
| Year of taxability - in the year of transfer | 117 |
| Full value of consideration for the purpose of Section 48 | 117 |
| Computation of capital gain | 117 |
| Transfer of Securities in a Demat form [Section 45(2A)] | 118 |
| Chapter 13 : Capital gain on transfer of capital asset by a partner,member to a firm or association of persons or body of individuals, as capital contribution [Section 45(3)] | 122 |
| Background | 122 |
| Nature of transaction (i.e., Particulars of transfer) | 123 |
| Year of taxability | 123 |
| Capital Gains assessable in the hands of | 123 |
| Full value of consideration for the purpose of Section 48 | 123 |
| Provisions in Brief : Capital Contribution by Partner [Section 45(3)] | 123 |
| Essential conditions | 124 |
| Section 45(3) vs Section 50C | 124 |
| Computation of Capital gains tax under Section 45(3) | 124 |
| Chapter 14 : Capital gain on transfer of capital assets by a firm/AOP/BOI to partner/member on its reconstitution[Section 45(4)] | 130 |
| Understanding of provisions of section 45(4) | 131 |
| Pre-conditions for applicability | 132 |
| Section 45(4) overrides section 45(1) | 133 |
| Understanding of provisions of section 9B | 135 |
| Pre-conditions for applicability of section 9B | 136 |
| Year of transfer | 141 |
| Year of taxation of income | 141 |
| Manner of computation of income | 141 |
| Computation on account of section 48(iii) | 142 |
| Understanding the provisions with example: | 143 |
| Computation of Capital Gains Tax under Section 45(4) | 143 |
| Rate of tax | 144 |
| CBDT Guidelines under sections 9B and 45(4) | 144 |
| Distribution of stock-in-trade to partners on dissolution | 146 |
| Computation of capital gain | 146 |
| Capital gain on partnership firm dissolution | 146 |
| Section 45(4) is not applicable | 147 |
| Chapter 15 : Capital gain on transfer by way of compulsory acquisition of an asset by Government [Section 45(5)] 162 | 162 |
| Nature of transaction (i.e., Particulars of transfer) | 163 |
| Capital Gains assessable in the hands of | 163 |
| Year in which chargeable | 163 |
| When is section 45(5) applicable? | 164 |
| Computation of capital gain | 164 |
| Initial Compensation | 164 |
| Taxability of enhanced compensation [Section 45(5)(b)] | 165 |
| Cost of acquisition and cost of improvement for enhanced compensation [Explanation to section 45(5)(b)] | 165 |
| Tax treatment of compensation received under interim order of a Court,Tribunal or other authority [Proviso to Section 45(5)(b)] | 165 |
| Compensation received by legal heirs | 165 |
| Reduction of compensation | 166 |
| Treatment of interest awarded under the Land Acquisition Act, 1894 | 166 |
| Interest on enhanced compensation is revenue receipt | 167 |
| CBDT has clarified the taxability of compensation on compulsory acquisition of Agriculture & Non-Agriculture land | 167 |
| Chapter 16 : Special provisions for computation of capital gains in case of Joint Development Agreement[Section 45(5A)] 178 | 178 |
| Legislative intent for introduction of Section 45(5A) | 178 |
| Specified agreement (Joint Development Agreement) [Explanation (ii) to Section 45(5A)] | 180 |
| Salient features of definition of Specified Agreement | 180 |
| Taxability of Joint Development Agreement from the point of view of Land Owner | 181 |
| Land owners liable to capital gains only when the builder completes the construction and gets the completion certificate | 181 |
| Cost of acquisition of the share in the project being Land or Building or both [Section 49(7)] | 181 |
| Cost of construction of the land owner’s portion that the owner buys after construction of the complete structure | 182 |
| Taxability of Joint Development Agreement from the point of view of Builder Developer | 182 |
| Provisions of Section 45(5A) shall not apply | 183 |
| Case of conversion of land held by land owner as capital asset to Stock-in-trade before entering in to JDA | 183 |
| Computation of Capital Gain | 184 |
| Consequences if land owner transfers his share before issue of completion certificate | 184 |
| Liability to Deduct TDS on monetary consideration (payment under joint development agreement) [Section 194-IC] | 186 |
| GST Applicability to Joint Development Agreement | 187 |
| Chapter 17 : Re-purchase of units under section 80CCB[Section 45(6)] 201 | 1201 |
| Nature of transaction (i.e., Particulars of transfer) | 201 |
| Capital Gains assessable in the hands of | 201 |
| Computation of capital gain | 202 |
| Year of taxability | 202 |
| Full value of consideration for the purpose of Section 48 | 202 |
| Chapter 18 : Computation of various types of capital gains 203 | 203 |
| Types of capital asset | 203 |
| [1] Long-term capital asset [Section 2(29A)] | 203 |
| Reduction of holding period for computation of capital gains for immovable property [Third proviso to section 2(42A)] | 203 |
| Conversion of leasehold rights into freehold rights—Gain would be long-term capital gain | 203 |
| [2] Short-Term Capital Asset [Section 2(42A)] | 204 |
| Property constructed on a land purchased earlier | 204 |
| Rebate of tax under Section 87A | 204 |
| Deduction under sections 80C to 80U | 204 |
| Chapter 19 : Short-term capital gains in certain cases[Section 111A] 206 | 206 |
| Meaning of short-term capital gain and long-term capital gain | 206 |
| Short-Term Capital Asset | 206 |
| Difference between long-term and short-term capital gains | 206 |
| Short-term capital asset [Section 2(42A)] | 207 |
| Applicability of Section 111A | 210 |
| Short-Term Capital Gains covered under Section 111A | 210 |
| Short-Term Capital Gains not covered under Section 111A | 211 |
| Tax on Short-Term Capital Gain | 211 |
| Adjustment of Short-Term Capital Gain (STCG) against Basic exemption limit | 212 |
| Deduction under Chapter VIA [i.e., sections 80C to 80U] | 212 |
| Computation of Short-Term Capital Gains | 213 |
| Computation of Short-term capital gains(Section 48 for non-depreciable assets) | 213 |
| Chapter 20 : Tax on long-term capital gains [Section 112] 216 | 216 |
| Difference between Section 112 and Section 112A of Income Tax Act, 1961 | 218 |
| Section 112 Exceptions: | 219 |
| Adjustment of Long-Term Capital Gain against basic exemption limit | 219 |
| Computation of long-term capital gains | 220 |
| Tax on long-term capital gain | 222 |
| Tax on long-term capital gain @ 10% in certain special cases | 222 |
| Chapter 21 : Long-term capital gains on transfer of Zero Coupon Bonds 224 | 224 |
| Meaning of Zero Coupon Bond | 224 |
| List of Zero Coupon Bonds as notified by the Central Government for the purpose of section 2(48) of the Act | 225 |
| Maturity or redemption of a Zero Coupon Bond to be regarded as transfer [Section 2(47)(iva)] | 227 |
| Tax Treatment of Zero Coupon Bonds | 227 |
| Tax treatment in the hands of company issuing such bonds[Section 36(l)(iiia)] | 227 |
| Taxation as Capital Gains/Business Income in the hands of Investors | 222 |
| Transfer of zero coupon bonds taxable as capital gains in the hands ofinvestor | 228 |
| TDS not applicable on Maturity/Redemption | 228 |
| CBDT amends Income Tax Rules to facilitate issuance of Zero Coupon Bonds by Infrastructure Debt Fund | 228 |
| Chapter 22 : Tax on long-term capital gains in certain cases[Section 112A] | 229 |
| Eligible assessee | 231 |
| Applicability of Section 112A | 231 |
| Benefit of Deduction under Chapter VIA & Rebate under section 87A shall be allowed | 232 |
| Threshold limit of long-term capital gain exemption | 232 |
| Set-off long-term capital loss from long-term capital gain | 232 |
| Concept of Grandfathering | 232 |
| Rate of tax under Section 112A | 232 |
| How tax is computed under Sections 112A and 112 | 233 |
| Cost of acquisitions in respect of the long-term capital asset acquired by the assessee before 01.02.2018 | 233 |
| Computation under Section 112A | 235 |
| Chapter 23 : Capital gains tax on sale of Bonus Shares | 236 |
| What is bonus share | 236 |
| Bonus Shares - Period of Holding | 236 |
| Cost of Acquisition of Bonus shares [Section 55(2)] | 236 |
| Provisions of section 56(2)(vii)(c) are not applicable to bonus shares | 237 |
| Expenses incurred for issue of bonus shares are to be allowed as revenue expenditure | 238 |
| Chapter 24 : Bonus stripping transactions [Section 94(8)] 239 | 239 |
| Concept of Bonus Stripping | 239 |
| Provision of Bonus Stripping under section 94(8) | 239 |
| Conditions for applicability to attract the provisions of section 94(8) | 242 |
| Income-tax implications on Bonus Stripping | 243 |
| Benefits of Indexed cost of Acquisition available | 243 |
| Chapter 25 : Capital gains tax on sale of Right Shares | 247 |
| Cost of acquisition of such Right Share | 247 |
| Right Entitlement | 247 |
| Tax treatment | 248 |
| Chapter 26 : Capital gains taxation of Mutual Funds | 249 |
| Factors determining the tax status of Mutual Funds | 249 |
| Liquid Funds | 250 |
| Hybrid Funds | 250 |
| Calculation of Capital Gains under Mutual Fund | 250 |
| Capital Gains Tax Rates on Mutual Funds from Assessment Year 2021-22 | 250 |
| Chapter 27 : Capital gains on Self-generated Capital Asset[Section 55(2)(a)] | 253 |
| (i) Goodwill of business (Not of profession) | 253 |
| (ii) Loom hours | 255 |
| (iii) Route permits or Stage carriage permits | 256 |
| (iv) Surrender of Tenancy right | 256 |
| (v) Trademark or brand name associated with business | 259 |
| (vi) Right to manufacture, produce or process any article, or thing for a consideration | 259 |
| (vii) Right to carry on any business | 259 |
| Computation of capital gain in the case of SELF-GENERATED ASSETS | 260 |
| Chapter 28 : Capital gains from transfer of unlisted shares | 262 |
| Exception wherein this is not Applicable | 262 |
| Unlisted shares of a company to be short-term capital asset if held for not more than 24 months [Third proviso to section 2(42A)] | 262 |
| CBDT clarifies that income/loss arising from transfer of unlisted shares to be considered under head “Capital Gain” irrespective of holding period, with certain exceptions | 264 |
| Taxability of surplus on sale of shares and securities | 265 |
| Chapter 29 : Capital Gains on distribution of Assets by Companies in its Liquidation [Section 46] | 269 |
| No capital gain to company on distribution of assets to shareholder on liquidation [Section 46(1)] | 269 |
| Company - Distribution of assets by a Company at the time of liquidation would not be regarded as transfer [Section 46(1)] | 269 |
| Capital gains on distribution of assets by companies in its liquidation | 269 |
| Applicability of section 46(1) | 270 |
| Tax treatment in the hands of the company | 270 |
| Tax treatment in the hands of the shareholders | 271 |
| liable to capital gains tax on receiving of money and asset on the liquidation of the company [Section 46(2)] | 272 |
| Determination of capital gain under section 46(2) | 272 |
| Period of holding [Section 2(42A)] | 272 |
| Cost of acquisition of the assets [Section 55(2)(b)(iii)] | 272 |
| Computation of capital gain | 272 |
| Chapter 30 : Capital gains on purchase by a company of its own shares or other specified securities (buy-back)[Section 46A] | 279 |
| Objectives of Buy-back of Shares | 279 |
| Buy-back of shares by companies and its treatment under Income-tax Act, 1961 | 280 |
| Ways of distributable Reserves benefits for its members | 284 |
| Tax on buy-back of shares in case of listed companies | 285 |
| Rules with respect to buy-back of shares [Rule 40BBl | 287 |
| Clarification of tax issues arising out of the provision to allow buy-back of shares by the companies | 291 |
| Chapter 31 : Transactions not treated as transfer[Section 47] 293 | 291 |
| [I] Capital gain on distribution of assets in kind by companies to its shareholders at the time of liquidation [Section 46(1)] | 293 |
| [2] Any distribution of capital assets on the total or partial partition of a Hindu Undivided Family (HUF) [Section 47(i)] | 293 |
| [3] Any transfer of a capital asset under a Gift or will or an irrevocable trust [Section 47(iii)] | 294 |
| [4] Transfer of capital asset by holding company to its subsidiary company [Section 47(iv)] | 295 |
| [5] Transfer of capital assets by 100% subsidiary company to its Indian holding company [Section 47(v)] | 298 |
| [6] Transfer of capital asset in a scheme of amalgamation[Section 47(vi)] | 299 |
| [7] Transfer of capital asset in a scheme of amalgamation of two foreign companies [Section 47(via)] | 300 |
| [8] Transfer in a scheme of amalgamation between a banking company [Section 47(viaa)] | 301 |
| [9] Transfer of capital asset being a share of a foreign company in the scheme of amalgamation not to be regarded as transfer subject to certain conditions being satisfied [Section 47(viab)] | 302 |
| [10] Transfer in a demerger of a capital asset by the demerged company to resulting company (in a scheme of demerger) [Section 47(vib)] | 302 |
| [11] Transfer of shares in Indian company in scheme of demerger between two foreign companies [Section 47(vic)] | 303 |
| [12] In a business reorganization by predecessor co-operative bank to the successor co-operative bank or to the converted banking company[Section 47(vica)] | 304 |
| [13] Being shares by shareholder of a predecessor co-operative bank or to the converted banking company in a business reorganization[Section 47(vicb)] | 304 |
| [14] Transfer of capital asset being a share of a foreign company in the scheme of demerger not to be regarded as transfer subject to certain conditions being satisfied [Section 47(vicc)] (with effect from assessment year 2016-17) | 305 |
| [15] Transfer/allotment of shares by the resulting company to the shareholders of the demerged company in a scheme of demerger[Section 47(vid)] | 306 |
| [16] Allotment of shares in Amalgamated Company in lieu of shares held in amalgamating company [Section 47(vii)] | 306 |
| [17] Transfer of capital asset of foreign currency convertible bonds or GDR by a non-resident to another non-resident [Section 47(viia)] | 310 |
| [18] Transfer of Rupee Dominated Bonds outside India by a non-resident to another non-resident [Section 47(viiaa] | 310 |
| [I9] Transactions by a non-resident on a recognized stock exchange located in any International Financial Services Centre where consideration is paid or payable in foreign currency [Section 47(viiab)] | 311 |
| [20] Any transfer, in a relocation, of a capital asset by the original fund to the resulting fund [Section 47(viiac)] | 314 |
| [21] Allotment of shares of the resultant fund to the shareholders of the original fund as a result of relocation [Section 47(viiad)] | 314 |
| [22] Transfer of capital asset by Indian Infra Finance Co. to an Institution established for financing infrastructure and development [Section 47(viiae)] | 318 |
| [23] Transfer of capital asset under a plan approved by Central Government [Section 47(viiaf)] | 318 |
| [24] Exemption from tax to transfer of Government Security by one non-resident to another [Section 47(viib)] | 319 |
| [25] Any transfer of Sovereign Gold Bond issued by the Reserve Bank of India (RBI) under the Sovereign Gold Bond Scheme, 2013 by way of redemption, by an assessee being an individual [Section 47(viic)] | 320 |
| [26] Conversion of Gold to Electronic Gold Receipt and vice versa[Section 47(viid)] Cost of acquisition of the asset [Section 49(10]...320 | 320 |
| [27] Transfer of agricultural land in India before 01.03.1970[Section 47(viii)] | 320 |
| [28] Any transfer of a capital asset being any work of art, manuscript,painting, etc. to Government/University/National Museum, etc.[Section 47(ix)] | 321 |
| [29] Conversion of bonds or debentures into shares [Section 47(x)] | 321 |
| [30] Conversion of Foreign Currency Exchangeable Bonds[Section 47(xa)] | 322 |
| [31] Any transfer by way of conversion of preference share of a company into its equity share [Section 47(xb)] | 323 |
| [32] Transfer by way of exchange of membership of a recognized stock exchange for shares of a company [Section 47(xi)] | 324 |
| [33] Transfer of land by sick industrial company which is managed by its workers’ co-operative [Section 47(xii)] | 324 |
| [34] Transfer of capital assets in the case of conversion of firm into company [Section 47(xiii)] | 325 |
| [35] Transfer of a capital asset, being a membership right held by a member of recognized stock exchange in India [Section 47(xiiia)] | 328 |
| [36] On Conversion of a private limited or Unlisted Public Company into Limited Liability Partnership (LLP) [Section 47(xiiib)] | 329 |
| [37] Transfer of a capital asset in the case of conversion of a sole proprietary concern into a company [Section 47(xiv)] | 335 |
| [38] Transfer involved in a scheme of lending of any securities[Section 47(xv)] | 336 |
| Conditions to be satisfied before the benefit of the section | 337 |
| [39] Reverse mortgage transactions by senior citizens - i.e., individuals aged 60 years or more [Section 47(xvi)] | 337 |
| [40] Any 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 not to be treated as transfer[Section 47(xvii)] | 339 |
| [41] Any transfer by a unit holder of a capital asset, being a unit or units, held by him in the consolidating scheme of a mutual fund[Section 47(xviii)] | 340 |
| [42] Any transfer by a unit holder of a capital asset, being a unit or units held by him in the consolidating scheme of mutual fund[Section 47(xix)] | 341 |
| [43] Exempt transfer of interest in a joint venture held by a PSU in exchange for shares of a foreign company [Section 47(xx)] | 342 |
| [44] Family settlement | 342 |
| [45] Transfer of Sick Unit to Employees’ Co-operative | 344 |
| Chapter 32 : Withdrawal of exemption in certain cases[Section 47A] 345 | 345 |
| Transfer of capital asset between holding and subsidiary company - Withdrawal of exemption in case of fully Holding and Subsidiary Company [Section 47A(1)] | 346 |
| Stock Exchange [Section 47A(2)] | 346 |
| Non-compliance of any specified condition by successor company[Section 47A(3)] | 346 |
| Withdrawal of exemption availed under Section 47(xiiib) on non-fulfillment of conditions - Deemed Profits [Section 47A(4)] | 347 |
| Consequences of withdrawal of exemption | 347 |
| Withdrawal of exemption availed under Section 47(xiiib) on non-fulfillment of conditions - Deemed Profits [Section 47A(4)] | 347 |
| Consequences of withdrawal of exemption | 347 |
| Re-computation of income in the case of transferor company if exemption withdrawn by section 47A-Section 155(7B) | 348 |
| Chapter 33 : Mode of computation of capital gains [Section 48] | 351 |
| Method of Computing Capital Gain [Section 48] | 354 |
| [I] Computation of capital gain in case of non-residents [First proviso to section 48] | 355 |
| [2] Indexed Cost of Acquisition and Improvement -Indexation [Second proviso to section 48] | 356 |
| [3] 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 [Third Proviso to Section 48] | 357 |
| [4] Appreciation of rupee shall be ignored for the purposes of computation of full value of consideration [Fourth Proviso to Section 48] | 358 |
| [5] Fifth Proviso to Section 48—Shares, etc. transferred under ESOP | 358 |
| [6] Sixth Proviso to Section 48-Securities Transaction Tax (STT) | 359 |
| Chapter 34 : Expenditure incurred wholly and exclusively inconnection with transfer of capital asset [Section 48 (i)] | 364 |
| Wholly and exclusively | 364 |
| Word ‘connection’ in section 48(i) | 365 |
| Deduction of expenditure | 365 |
| In case of sale of a house property | 365 |
| (i) Brokerage or Commission paid for securing a purchaser | 365 |
| (ii) Cost of Stamp Papers or Registration Fees borne by the Vender (Seller) | 365 |
| (iii) Travelling Expenses in connection with transfer (Sale) | 365 |
| (iv) Litigation Expenses for claiming Enhancement in Compensation | 366 |
| (v) Where property has been inherited, expenditure incurred with respect to procedures associated with the will and inheritance, obtaining succession certificate, costs of executor, may also be allowed | 366 |
| (vi) Advertisement cost incurred by the seller to get buyer | 366 |
| In case of sale of jewellery | 366 |
| Expenditure allowed under other heads of income | 366 |
| Compensation paid to related parties to get them vacate the land transferred cannot be allowed as deduction under section 48(i) in computing capital gains | 366 |
| Chapter 35 : Cost of acquisition of the asset and the cost of anyimprovement thereto [Section 48(ii)] | 379 |
| Cost of Acquisition | 379 |
| Cost of Improvement | 379 |
| Mode of computation [Section 48] | 379 |
| Chapter 36 : Special provisions in the case of a non-resident Indian(NRI) [First and Section proviso to section 48] | 386 |
| Mode of Computation for non-resident (First Proviso to section 48 and Rule 115A) | 387 |
| Capital gain in the case of transfer of shares/debentures by non-residents[First Proviso to section 48 and rule 115A] | 387 |
| Chapter 37 : Cost Inflation Index [Explanation (v) to Section 48] 390 | 390 |
| Background | 390 |
| Indexed cost of acquisition | 391 |
| How to do indexation | 391 |
| Cost of Inflation Index | 391 |
| Shifting base year from 1981 to 2001 for computation of capital gains[Section 55(2)(b)] | 391 |
| Cost Inflation Index Applicable from Financial Year 2020-21(Assessment Year 2021-22) with Base Year 2001-02 | 392 |
| Cost of acquisition - Property inherited indexed cost to be determined as on 01.04.1981 | 396 |
| Gifted property : Indexation | 396 |
| In case of transfer by gift, will, trust, etc., indexed cost to be determined with reference to holding by previous owner | 396 |
| Indexed cost of gifted assets has to be determined with reference to previous owner | 396 |
| Family arrangement is analogous to partition attracting Section 49[Family arrangement (Settlement)] | 397 |
| Indexed cost of acquisition of house inherited from father - Sale of house inherited from father - Cost of acquisition of house to the assessee has to be deemed to be the cost for which the previous owner had acquired it | 397 |
| Chapter 38 : Cost with reference to certain modes of acquisition [Section 49] | 398 |
| Cost of Acquisition (COA) | 298 |
| [1] Cost of Acquisition of Asset to the Previous Owner to calculate Capital Gain (Deemed cost of acquisition) [Section 49] | 299 |
| Cost of acquisition on notional basis | 400 |
| Deemed cost of acquisition | 403 |
| Computation of indexed cost of acquisition | 405 |
| Computation of Indexed Cost of Acquisition and Improvement can be divided into 5 cases: | 405 |
| [2] Cost of Acquisition of Shares of Amalgamated company[Section 49(2)] | 411 |
| [3] Cost of acquisition in the case of Sharesi Debentures acquired on Conversion of Bonds or Debentures or Debentures Stock or Deposit Certificate [Section 49(2A)] | 412 |
| Employee Stock Option Plan (ESOP) [Sec. 49(2AA)] | 413 |
| [4] Cost of acquisition of specified security or sweat equity shares referred to in section 17(2)(vi) (i.e., Employee Stock Option Plan (ESOP) [Section 49(2AA)] | 413 |
| Directs Revenue to accept cost of ESOP shares as per Section 49(2AA),if tax residency certificate (TRC) found in order | 413 |
| [5] Cost of the partnership rights of a partner on conversion of a company into LLP {i.e., Transfer of right of a partner in Limited Liability Partnership (LLP) consequent to conversion referred to in section 47(xiiib)} [Section 49(2AAA)] | 414 |
| [6] ESOP/Sweat Equity Shares [Section 49(2AB)] | 414 |
| [7] Global Depository Receipts-Cost of acquisition of shares[Section 49(2ABB), w.e.f. 01.04.2016] | 414 |
| [8] Cost of acquisition of unit of a business trust acquired inconsideration of transfer of asset referred to in section 47(xvii) [Section 49(2AC)] | 415 |
| [9] Cost of acquisition of the units of the consolidated scheme acquired in lieu of units held in a consolidating scheme[Section 49(2AD)] | 415 |
| [10] Cost of acquisition of equity share on conversion of preference share into equity share [Section 49(2AE)] | 415 |
| [11] Cost of acquisition of the units in the consolidated plan of mutual fund scheme [Section 49(2AF)] | 415 |
| [12] Cost of acquisition of a unit or units in the segregated portfolio[Section 49(2AG)] | 416 |
| [13] Cost of the acquisition of the original units held by the unit holder in the main portfolio [Section 49(2AH)] | 416 |
| [14] Cost of the acquisition of any transfer of a Capital asset being shares referred to in section 47(XX) [Section 49(2AI)] | 416 |
| [15] Cost of acquisition of shares of resulting company (Demerger)[Section 49(2C)] | 416 |
| [16] Cost of acquisition of the original shares of the demerged company[Cost of the acquisition of demerged company’s shares after demerger] [Section 49(2D)] | 417 |
| [17] Business reorganization of Co-operative Bank [Section 49(2E)] | 417 |
| [18] Cost of Acquisition to Transferee Company where section 47A is applicable [Section 49(3)] | 417 |
| [19] Cost of acquisition of the property received/acquired in a manner given under section 56(2)(vii)/(viia) i.e., without consideration or for inadequate consideration [Section 49(4)] | 417 |
| [20] Cost of assets acquired on liquidation of a company | 418 |
| [21] Cost of acquisition in case where capital gain arises from the transfer of an asset declared under the Income Declaration Scheme,2016 [Section 49(5)] | 418 |
| [22] Cost of acquisition in case where reconstituted plot or land,received under land pooling scheme [Section 49(6)] | 419 |
| [23] Cost of acquisition of the share in the project being land or building or both in a joint development agreement referred in section 45(5A) [Section 49(7)] | 419 |
| [24] Cost of acquisition of capital assets for entities where tax on accreted income paid [Section 49(8)] | 419 |
| [25] Conversion of Stock-in-Trade into Capital Asset-Cost of acquisition on subsequent sale of capital asset [Section 49(9)] | 420 |
| [26] Cost of the Electronic Gold Receipt | 420 |
| Chapter 39 : Capital gain on Depreciable Assets[Section 50] | 423 |
| Special provision for computation of capital gains in case of depreciable assets | 423 |
| Conditions for claiming depreciation . | 424 |
| Computation of Capital Gains in case of depreciable assets | 425 |
| Section 50 comes into picture | 425 |
| Calculation of capital gains in case of depreciable capital asset | 426 |
| [1] Where part of the block of depreciable assets is transferred, i.e., the block does not cease to exist [Section 50(1)] | 426 |
| [2] When entire block of depreciable assets is transferred, i.e., the block ceases to exist [Section 50(2)] | 427 |
| Rule for Computation of short term capital gains and written down value under section 50 where depreciation on goodwill has been obtained[Rule 8AC] | 428 |
| Chapter 40 : Special provision for cost of acquisition in case ofdepreciable asset [section 50A] 434 | 434 |
| Cost of acquisition in case of depreciable assets on which depreciation allowed at SLM rates – Section 50A | 434 |
| Power generation undertakings [Section 50A] | 435 |
| Chapter 41 : Special provision for computation of capital gains in case of Market Linked Debenture [section 50AA] | 436 |
| Special provision for computation of capital gains in case of Market Linked Debenture | 436 |
| Chapter 42 : Capital gain in case of Slump Sale [section 50B] 437 | 437 |
| Background | 437 |
| “Slump Sale” meaning [Section 2(42C)] | 439 |
| Slump Exchange is held to be taxable | 440 |
| (i) Taxpayer owns an Undertaking | 440 |
| (ii) He transfers the undertaking by way of Sale | 440 |
| All types of transfers are covered within the scope of slump-sale | 440 |
| (iii) Transfer takes place for a lump sum consideration | 440 |
| Special Provision | 440 |
| Who is eligible | 441 |
| Nature of transaction | 441 |
| Taxability of capital gains arises in the year of transfer of the undertaking | 441 |
| Nature of capital gains : Short-term or long-term | 441 |
| Cost of Acquisition and Cost of Improvement | 441 |
| Computation of “Net Worth” | 441 |
| Indexation not available on cost of acquisition, i.e., net worth | 442 |
| Period of Holding | 442 |
| Computation of capital gains | 442 |
| Revaluation of assets shall not be considered | 442 |
| Chartered Accountant’s report certifying the computation of Net Worth to be enclosed [Section 50B(3) & Rule 6H] | 443 |
| Chapter 43 : Valuation of consideration in case of land or building or both [Section 50C] 454 | 454 |
| Background | 454 |
| With effect from Assessment Year 2021-22 - No adjustment if variation between stamp duty value & sale consideration does not exceed 110%[Third proviso to section 50C] | 456 |
| From Assessment Years 2019-20 to 2020-21 - No adjustment if variation between stamp duty value & sale consideration does not exceed 105% [Third proviso to section 50C] | 456 |
| Basic Ingredients of Provisions of section 50C | 457 |
| Value to be adopted for Capital Gains | 458 |
| Meaning of Stamp Duty Value (Circle Rate) | 459 |
| Year of Taxability | 459 |
| Computation of capital gain | 459 |
| Applicability of section 50C to section 45(2), 45(3), 45(4), 45(5) | 459 |
| Coverage of section 50C is very wide | 459 |
| Applicability of Section 50C/43CA viz-a-viz Section 56(2)(vii)(b) as amended by Finance Act, 2013 | 460 |
| Reference to Valuation Officer | 460 |
| Section 50C also applicable to documents not registered | 460 |
| Section 50C would not apply on compulsory acquisition of land by NHAI as stamp duty is not payable on such transfer | 460 |
| Sale of property held with commercial intent taxable as business income, Section 50C inapplicable | 461 |
| Chapter 44 : Special provisions for full value of consideration for transfer of assets other than capital assets in certain cases [Section 43CA] 479 | 479 |
| Background | 479 |
| Other electronic modes [Rule 6ABBA] | 481 |
| Sale value of consideration [Proviso to Section 43CA(1)] | 481 |
| Stamp duty value can be up to 120% of the consideration if the transfer of “residential unit” is made between 12.1 1.2020 and 30.06.2021[Second proviso to Section 43CA] | 482 |
| Explanation in section 43CA clarifies that for the purposes of this section, “residential unit” means | 482 |
| Tax auditor’s duty if 2nd proviso to section 43CA(1)/4th proviso to section 56(2)(x) applies | 483 |
| Applicability of Section 43CA | 483 |
| Preference to Valuation Officer (Provisions of Section 50C(2) and(3) made applicable to section 43CA) [Section 43CA(2)] | 484 |
| Where valuation can be referred to the Valuation Officer[Section 50C(2)] | 484 |
| Consequences where the value is determined by the valuation officer | 484 |
| Stamp Duty value on the date of agreement to be deemed consideration [Section 43CA(3)] | 485 |
| Chapter 45 : Special provisions for full value of consideration for transfer of unlisted/unquoted shares [Section 50CA] 489 | 489 |
| Section 50CA 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 | 489 |
| Valuation of unquoted shares | 489 |
| FMV of unquoted equity shares | 489 |
| Quoted Share | 491 |
| Chapter 46 : Fair market value deemed to be full value of consideration in certain cases [Section 50D] | 492 |
| Background | 492 |
| “Fair Market Value (FMV)” | 493 |
| Conditions for applicability of provision of section 50D | 493 |
| Where the consideration is not ascertainable or cannot be determined –Section 50D | 494 |
| Example of case where consideration cannot be determined and section 50D would apply | 494 |
| Chapter 47 : Advance money received [Section 51] 497 | 497 |
| Background | 497 |
| Consequential amendment in section 51 to avoid double taxation | 497 |
| Applicability of section 51 | 498 |
| Advance money received and forfeited shall be treated as “Income from Other Sources” under section 56(2)(ix) | 498 |
| Reasons for Introduction of Section 56(2)(ix) : Change in Tax Treatment of Amount Forfeited | 499 |
| Chapter 48 : Consideration for transfer in cases of understatement [Section 52] 503 | 503 |
| Consideration for transfer in cases of understatement | 503 |
| Chapter 49 : Exemption of capital gains from a residential house[Section 53] 504 | 504 |
| Exemption of capital gains from a residential house | 504 |
| Chapter 50 :Capital gains exempt from income-tax 505 | 505 |
| [1] Capital gain arising on conversion of an Indian branch of foreign bank into a subsidiary Indian company : [Section 115JG] | 505 |
| Quantum of Exemption | 506 |
| Essential Conditions | 506 |
| [2] Compensation under section 96 of RECTLARR Act, 2013—Exemption from income-tax, stamp duty and fees | 507 |
| [3] Non-Resident’s Capital assets situate abroad would not be taxable | 509 |
| Chapter 51 : Exemption in respect of long-term or short-term capital gain arising on transfer of units of unit scheme, 1964 (US 64)(transferred on or after 01-04-2002) [Section 10(33)] | 510 |
| Quantum of Exemption | 510 |
| Essential conditions | 510 |
| Chapter 52 : Exemption in respect of capital gain on compensation received on compulsory acquisition of urban agricultural land situated within specified urban limit [Section 10(37)] | 512 |
| Quantum of exemption | 513 |
| Essential conditions: | 513 |
| Taxability of interest received by assessee on enhanced compensation awarded by Court, pursuant to compulsory acquisition of assessee’s agricultural land by Government | 514 |
| Interest on late receipt of compensation from Compulsory Acquisition is taxable | 515 |
| Chapter 53 : Tax incentive for the development of capital of Andhra Pradesh [Section 10(37A)] | 524 |
| Background | 524 |
| Essential conditions | 525 |
| Chapter 54 :Exemption in respect of long-term capital gain arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity share in a company or a unit of an equity oriented fund or a unit of a business trust [Section 10(38)] | 527 |
| “Equity Oriented Fund” means— | 529 |
| Conditions precedent for exemption | 529 |
| Eligible .530 Section 112A - Applicability | 530 |
| Transactions of acquisition of equity shares to be not eligible for exemption under section 10(38) | 531 |
| CBDT notifies transactions for which the condition of chargeability to STT for claiming exemption under Section 10(38) of the Income Tax Act, 1961 shall not apply | 531 |
| Chapter 55 : Exemption for capital gain arises from the transfer of a Residential House Property [Section 54] | 543 |
| Who can claim exemption | 545 |
| Which original asset is qualified for exemption | 545 |
| Which new asset should be purchased or acquired | 545 |
| Time limit for acquiring the new assets | 545 |
| Chapter 56 : Relief of tax on capital gains in certain cases[Section 54A] | 572 |
| Relief of tax on capital gains in certain cases | 572 |
| Section 54A omitted by the Finance (No. 2) Act, 1971, with effect from 01.04.1972 | 572 |
| Chapter 57 : Exemption from capital gain arises from the transfer of urban agricultural land used for agricultural purpose [Section 54B] | 574 |
| Who can claim exemption | 575 |
| Nature of the Asset | 575 |
| Which original asset is qualified for exemption | 575 |
| Which new asset should be purchased | 575 |
| Essential conditions | 576 |
| Consequences if new agricultural land is transferred within 3 years | 576 |
| Capital Gains Account Scheme, 1988 of deposit in respect of exemption under section 54B | 576 |
| Consequent if, the deposit amount is not utilized | 577 |
| Chapter 58 : Capital gain on transfer of jewellery held for personal use not to be charged in certain cases [Section 54C] | 590 |
| Section 54C was omitted by the Finance Act, 1976, with effect from 01.04.1976 | 590 |
| Chapter 59 : Exemption from capital gain arises from the compulsory acquisition of land and building used for industry [Section 54D] | 591 |
| Who can claim exemption | 592 |
| Which original asset is qualified for exemption | 592 |
| Which new asset should be purchased | 592 |
| Essential conditions | 593 |
| Amount of exemption available | 593 |
| Consequences if new land or building is transferred within 3 years | 593 |
| Scheme of deposit in Capital Gains Accounts Scheme, 1988 in respect of exemption under section 54D | 594 |
| Consequence if the amount is not utilized | 594 |
| Chapter 60 : Capital gain on transfer of capital assets not to be charged in certain cases [Section 54E] | 596 |
| Capital gain on transfer of capital assets not to be charged in certain cases | 596 |
| Chapter 61 : Exemption from capital gain arises from the transfer of long-term capital assets not to be charged in the case of investment in specified securities [Section 54EA] | 600 |
| Exemption under section 54EA—Sale of flats received from developer for transfer of land and invested the amount in specified securities | 601 |
| Investment in specified securities - Exemption - Time limit | 601 |
| Chapter 62 : Exemption from capital gain arises from the transfer of a long-term capital assets not to be charged in certain cases [Section 54EB] | 602 |
| Difference between Section 54EA and Section 54EB as far as capital gains tax exemptions are concerned | 603 |
| Chapter 63 : Capital gain arises from the transfer of a long-term capital asset being land or building or both not to be charged on investment in certain bonds(Financial Assets) [Section 54EC] | 605 |
| Who can claim exemption? | 607 |
| Nature of the Asset | 608 |
| Which original asset is qualified for exemption? | 608 |
| Which new asset should be purchased (acquired)? | 608 |
| Essential conditions | 609 |
| Holding period of new asset | 609 |
| Consequences if the asset is transferred within 5 years - Withdrawal of Section 54EC exemption if bonds issued on or after 01.04.201 8 transferred or redeemed within 5 years[Proviso to section 54EC(2)] | 609 |
| Amount of exemption available under section 54EC | 610 |
| Period for investment is to be made in asset(i.e., Time limit for Investment) | 610 |
| Chapter 64 : Capital gain arises from the transfer of certain listed securities or unit, not to be charged in certain cases [Section 54ED] | 615 |
| Exemption available up to assessment year 2006-07 | 615 |
| Chapter 65 : Capital gain arises from the transfer of a long-term capital asset not to be charged on investment in units of a specified fund [Section 54EE] | 617 |
| Essential Conditions | 618 |
| Quantum of deduction | 618 |
| Revocation of exemption | 618 |
| Chapter 66 : Exemption from Capital gain arises from the transfer of a long-term capital asset other than a house property[Section 54F] | 620 |
| Who can claim exemption? | 622 |
| Which original asset is qualified for exemption? | 622 |
| Which new asset should be acquired for exemption | 622 |
| Deduction is eligible only in respect of one residential house | 623 |
| Time limit for purchase or construction of new house | 623 |
| Essential conditions | 623 |
| Understanding the term ‘Net Consideration’ | 624 |
| Amount of exemption available | 624 |
| Consequences of transferring the residential house purchased before 3 years | 624 |
| Capital Gains Account Scheme, 1988 of deposit in respect of exemption under section 54F | 625 |
| Deposit in Savings Bank Account - Not eligible for exemption | 625 |
| Consequences if the deposit amount is not fully utilized for the purchase or the construction of a residential house | 625 |
| Chapter 67 : Exemption from capital gain arises from the transfer of assets in the case of shifting of industrial undertaking from urban area [Section 54G] | 659 |
| Who can claim exemption? | 660 |
| Which original asset is qualified for exemption? | 660 |
| Holding Period of Original Assets | 661 |
| Amount considered to have been invested in new asset | 661 |
| Essential conditions | 661 |
| Amount of exemption available under section 54G | 662 |
| Consequences of if the new asset transferred within 3 years | 662 |
| Capital gains Account Scheme, 1988 of deposit in respect of exemption under section 54G | 662 |
| Consequences if the deposited amount is not fully utilized | 662 |
| Chapter 68 : Exemption from capital gain arises from the transfer of assets in the case of shifting of industrial undertaking from urban area to any special economic zone (SEZ) [Section 54GA] | 670 |
| Who can claim exemption | 672 |
| Which original asset is qualified for exemption? | 672 |
| Transfer of capital asset | 672 |
| Which new asset should be purchased? | 673 |
| Essential conditions | 673 |
| Quantum of exemption available | 673 |
| Consequences if the new asset is transferred within 3 years | 674 |
| Scheme of deposit in respect of exemption under section 54GA | 674 |
| Chapter 69 : Exemption from capital gain arises from the transfer of residential property not to be charged in certain cases (house or plot of land) [Section 54GB] | 675 |
| Who can claim exemption? | 678 |
| Assets to be acquired for exemption (i.e. Investment to be made) | 678 |
| Essential conditions | 679 |
| Period during which exemption available | 679 |
| Time limit for acquiring the new assets | 680 |
| Amount of exemption available under section 54GB | 680 |
| Capital Gain Deposit Account Scheme, 1988 | 681 |
| Withdrawal of exemption if equity shares in company or new asset acquired by company is sold or transferred within a period of 5 years (or 3 years for computer and software) from date of acquisition | 681 |
| Chapter 70 : Extension of time acquiring new asset or depositing or investing amount of capital gain[Section 54H] | 682 |
| Background | 682 |
| Chapter 71 : Cost of any improvement for the purposes of sections 48 and 49 [Section 55(l)(b)] | 684 |
| General meaning | 6684 |
| Cost of improvement | 68 |
| Cost of improvement of capital asset if acquired before 01.04.2001(expenditure incurred before 01.04.2001- not considered) | 686 |
| Expenses allowable under other heads of income are to be ignored(Double deduction not permitted) | 686 |
| Cost of improvement of various assets [Section 55(l)(b)] | 686 |
| Indexed cost of improvement | 687 |
| Indexed cost of improvement | 687 |
| Expenses incurred have been held to be cost of improvement | 687 |
| Chapter 72 : Cost of acquisition for the purpose of sections 48 and 49 [Section 55(2)] | 694 |
| Cost of Acquisition under section 55(2) | 697 |
| Cost of acquisition being the Fair Market Value (FMV) as on 01.04.2001[Section 55(2)] | 697 |
| Cost of acquisition of an asset acquired before 01.04.2001 | 697 |
| Cost of acquisition for assets acquired on or before 01.04.2001[Section 55(2)(b)(i)l | 698 |
| Cost of acquisition being the Fair Market Value (FMV) as on 01.04.2001[Section 55(2)] | 698 |
| Cost of acquisition [Section 55(2)] | 698 |
| Notional cost of acquisition | 699 |
| [1] Cost of acquisition of goodwill of a business or a trade mark or a brand name associated with a business [Section 55(2)(a)] | 699 |
| Intangible Assets [Section 55(2)(a)] | 701 |
| [2] Cost of acquisition of Right Shares [Section 55(2)(aa)] | 702 |
| Cost of acquisition for the purpose of calculating Tax payable under section 11 2A [Section 55(2)(ac)] | 703 |
| Computation of cost of acquisition - Fair Market Value of the Asset as on 01.04.2001 [Proviso to Explanation (b)(ii) of Section 55(2)(ac)] | 703 |
| Cost of acquisition of Original Shares [Section 55(2)(b)] | 704 |
| Other assets [Section 55(2)(b)] | 704 |
| Cost of acquisition of Right Shares [Section 55(2) read with section 55(2)(b)] | 705 |
| Chapter 73 : Cost of acquisition to the previous owner where the cost for which the previous owner acquired the property cannot be ascertained [Section 55(3)] | 715 |
| Cost of Acquisition of Asset to the Previous Owner to calculate Capital Gain[Section 49(1)] | 715 |
| Period of holding of previous owner | 716 |
| Chapter 74 : Reference to valuation officer [Section 55A] | 719 |
| Valuation Officer [Section 2(r)] | 720 |
| Appointment of Valuation Officers [Section 12A] | 720 |
| Circumstances when reference can be made to Valuation Officer | 720 |
| Conditions for reference to Valuation Officers [Rule 111AA] | 720 |
| Appearance by registered valuer in certain matters [Section 287A] | 721 |
| Determination of Fair Market Value (FMV) | 721 |
| Procedure to be followed by the Valuation Officer | 721 |
| Reference to Departmental Valuation Officer for capital gains purpose | 722 |
| Requirement to refer the case | 722 |
| Adopting value determined by DVO based on CPWD rates | 722 |
| Chapter 75 : Tax on income from units purchased in foreign currency or capital gains arising from their transfer[Section 115AB] | 726 |
| Tax on income from units purchased in foreign currency or capital gains arising from their transfer | 726 |
| Nature of income | 727 |
| Deduction under sections 80CCC to 80U | 727 |
| TDS on long-term capital gains from units referred to in section 115AB[Section 196B] | 727 |
| Who is responsible to deduct tax under section 196B | 728 |
| Nature of Payment | 728 |
| When to Deduct TDS under Section 196B | 728 |
| Rate of TDS under Section 196B | 728 |
| SEBI to be approving authority for “overseas financial organization” [Finance Act, 2001 - Circular No. 14/2001, Dated 09.11.2001] | 728 |
| Tax incentive to off-shore mutual funds for investment in India[Finance (No. 2) Act, 1991 - Circular No. 621, Dated 19.12.1991,As Amended by Circular No. 642, Dated 11.12.1992 and Circular No. 698, Dated 28.12.1994] | 729 |
| Chapter 76 : Tax on income from bonds or global depository receipts purchased in foreign currency or capital gains arising from their transfer [Section 115AC] | 730 |
| Global Depository Receipts (GDRs) | 732 |
| Taxability of Global Depository Receipts (GDRs) | 732 |
| Concessional rate of tax under section 115AC extended to other notified schemes [Finance Act, 2001 - Circular No. 14/2001,Dated 09.11.2001] | 734 |
| Tax incentive for investment in bonds or shares of Indian companies issued abroad [Finance Act, 1992 - Circular No. 636,Dated 31.08.1992] | 734 |
| No capital gain arises from conversion of foreign currency convertible bonds into shares | 735 |
| Chapter 77 : Tax on income of specified fund or investment division of an offshore banking unit or foreign institutional investor from securities or capital gains arising from their transfer [Section 115AD] | 737 |
| Taxability of gains earned by Offshore Funds | 743 |
| Treatment of the gains accrued up to 31.01.2018 in the case of Flls | 743 |
| Tax treatment of transfer of share or unit between 01.02.2018 and 31.03.201 8 in the case of Flls | 743 |
| Tax treatment of transfer made on or after 01.04.2018 in case of Flls | 743 |
| Foreign Institutional Investors (FII) Taxation | 743 |
| No tax will be deducted at source in case of payment of long-term capital gains by Foreign Institutional Investors (Flls) | 743 |
| Section 115AD of the Income-tax Act, 1961 – Income of Foreign Institutional Investors from Securities or Capital Gains arising from their Transfer –Taxability of – Notified Foreign Institutional Investors | 744 |
| Section 115AD, read with Section 2(14) of the Income-Tax Act, 1961 - Foreign Institutional Investors - CBDT Clarifies Differential Regime between Domestic Investors (Including AIF Category III) and FPIs existed even prior to General Budget 2019 and was not creation of the Finance (No. 2) Act, 2019 | 744 |
| Section 111A and section 112A, read with section 115AD of the Income-Tax Act, 1961 - Capital Gains in Certain Cases - Government withdraws enhanced Surcharge on tax payable on Transfer of Certain Assets | 745 |
| Chapter 78 : Tax on investment income and long-term capital gains [Section 115E] | 749 |
| Reduction in the rate of long-term capital gains tax in the case of non-residents [Finance Act, 1997 - Circular No. 763, Dated, 18.02.1998] | 749 |
| Modification of the provisions relating to certain incomes of non-residents [Finance Act, 1985 - Circular No. 421,Dated, 12.06.1985] | 749 |
| Original shares having been purchased in foreign exchange, bonus shares are also foreign exchange assets under section 115E. | 750 |
| Benefit of concessional rate of tax would not be available on short-term capital gains arising from sale of shares | 750 |
| Chapter 79 : Long-term capital gain on transfer of foreign exchange assets by a non-residential Indian (NRI) not to be charged in certain cases [Section 115F] | 753 |
| Eligible assessee | 754 |
| Essential conditions | 754 |
| Quantum of exemption | 755 |
| Consequences if the new asset is transferred within 3 years | 756 |
| Option to avail or not to avail the benefit of section 115F with assessee [Section 115-1] | 756 |
| Chapter 80 : Capital gain accounts scheme, 1988 | 758 |
| Background | 758 |
| Who can deposit in Capital Gains Account Scheme? | 758 |
| Who can accept deposit? | 759 |
| Time limit to deposit the amount | 760 |
| Types of account under Capital Gains Accounts Scheme | 761 |
| Transfer from Deposit Account-B to Deposit Account-A – Approval of Assessing Officer is not mandatory | 762 |
| Nomination | 762 |
| Withdrawals from Deposit Accounts | 763 |
| No creation of any charge | 763 |
| Closure of Deposit Account | 763 |
| Consequences if the deposit amount is not fully utilised | 763 |
| In case an individual dies before the expiry of the two/three years | 764 |
| Chapter 81 : Securities transaction tax (STT) | 768 |
| When is Securities Transaction Tax (STT) levied | 768 |
| Features of Securities Transaction Tax | 769 |
| Securities Transaction Tax Rate | 769 |
| Value for calculating the Securities Transaction Tax | 770 |
| Securities on which Securities Transaction Tax (STT) is applicable | 771 |
| Long-term capital gain tax – exempted under section 10(38) | 772 |
| Short-term capital gain – taxable under sections 111A and 115AD | 758 |
| Securities liable to short-term capital gains | 773 |
| Where total income consists of short-term capital gains and other income | 773 |
| The most common Futures contract traded in India are Nifty Futures | 774 |
| Chapter 82 : Self-off and carry forward of capital loss[Sections 70, 71 & 74] | 776 |
| [I] Set-off of Capital Losses - Inter-source adjustment - under the same head of income [Section 70] | 776 |
| [2] Set-off of Capital Losses - Inter-head adjustment - one head against income from another head [Section 71] | 776 |
| [3] Carry forward of Capital Losses | 776 |
| Chapter 83 : Tax deducted at source (TDS) | 780 |
| [1] Tax Deducted at Source on Sale of Immovable Properties[Section 194-IA] | 780 |
| (2) TDS on payment under joint development agreement | 784 |
| [3] TDS on Payment of compensation on acquisition of Immovable Property [Section 194-LA] | 785 |
| Chapter 84 : Rate of capital gains tax | 788 |
| Basics of capital gains tax in brief | 791 |
| Chapter 85 : Income held as business income and not capital gains | 794 |
| Sale of land to be treated as business income if it was held as stock-in-trade in books of account | 795 |
| Conversion of agricultural land into residential plots and sale of residential plots - Consideration over fair market value to be assessed as business income - No question of law | 795 |
| Chapter 86 : Important forms | 796 |
| FORM NO. 3CEA | 796 |
| FORM No. 5B | 798 |
| FORM No.10 IH | 802 |
| FORM No. 16B | 806 |
| FORM No. 26 QB | 807 |
| FORM A | 809 |
| FORM B | 811 |
| FORM C | 813 |
| FORM D | 815 |
| FORM E | 817 |
| FORM F | 818 |
| FORM G | 820 |
| FORM H | 821 |
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