How To Save Tax In This Situation.. ?

 Copyright is an intangible depreciable asset as per the Income Tax Act. Hence when you sell the software you are actually transferring the copyright. So any gain from such sale shall be short term capital gain. However if you have held the copyright more than 36months then it will be treated as long term capital asset and exemption can be claimed under section 54EC by investing the gain in capital gain bonds issued by REC or NHAI.

Originally posted by : Alok Siddapur
	Copyright is an intangible depreciable asset as per the Income Tax Act. Hence when you sell the software you are actually transferring the copyright. So any gain from such sale shall be short term capital gain. However if you have held the copyright more than 36months then it will be treated as long term capital asset and exemption can be claimed under section 54EC by investing the gain in capital gain bonds issued by REC or NHAI.

Do I need to have my Copyright claimed to take benefit of this ? I have taken no legal/procedural action to claim copyright but it is well established on several reputed online agencies.

You said that you have been paying tax for the last 5 years. Have you shown the software in the IT return as your asset and claimed depreciation?

Originally posted by : Alok Siddapur
	You said that you have been paying tax for the last 5 years. Have you shown the software in the IT return as your asset and claimed depreciation?

I receive money in my Paypal account and via wire-transfer and I had shown the income clubbed with income from other software(s) under one-head "Software Outsourcing A/C"  in past returns as intially adviced by my lawyer and then later adopted by my CA.

Any updates to my question above ?

Any updates to my question above ?

if u can prove the date and your rights over the software ..........( tough to prove in absence of any accreditated agency certification) , then u can go for capital gain. 

If you can mail me the computation of income for last 2 or 3 years to alok.sidds @ gmail.com then i can figure out some solution.

Hi Shalini

Since you were not claiming any depreciation on the software you can definitely show it as your capital asset without the charge of depreciation.

Since the software is more than 3 years old, The entire proceeds become long term capital gain.

Now after selling the same, try to save under the provisions of Sec 54, 54F etc.

Regards

CA Apurav Agarwal

9999285148