Section 54gb

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Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2012 Please any one please give me details of Sec 54 GB under Income tax act.
Im not getting of what amt i will get deduction under said section

Mihir Doshi

Mihir Doshi (Expert)
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19 April 2012 No Capital Gains Tax on transfer of residential property if invested in manufacturing small or medium enterprise.

As per the Finance Act, 2012 a new section 54GB has been added in the Income-tax Act which provides relief from re-investment of sale consideration in the equity of a new start-up SME company in the manufacturing sector which is utilized by the company for the purchase of new plant and machinery. Some of the important conditions to avail this benefit are as under :-

i) The amount of net consideration is used by the individual or HUF before the due date of furnishing of return of income under sub-section (1) of section 139, for subscription in equity shares in the SME company in which he holds more than 50% share capital or more than 50% voting rights.

ii) The amount of subscription as share capital is to be utilized by the SME company for the purchase of new plant and machinery within a period of one year from the date of subscription in the equity shares.

iii) If the amount of net consideration subscribed as equity shares in the SME company is not utilized by the SME Company for the purchase of plant and machinery before the due date of filing of return by the individual or HUF, the unutilized amount shall be deposited under a deposit scheme to be prescribed in this behalf.

iv) Suitable safeguards so as to restrict the transfer of the shares of the company, and of the plant and machinery for a period of 5 years are proposed to be provided to prevent diversion of these funds. Further, capital gains would be subject to taxation in case any of the conditions are violated.

Here net consideration is totally exempt with no limits on it.

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