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Capital Gain- CONTENTS

Capital Assets, Capital Gain & Transfer of Capital Assets for Taxation of 'Capital Gain'

  1. Basis of Charge in case of Capital Gain [Section 45(1)]

  2. Capital Asset for Computing Capital Gain [Section 2(14)]

  3. Types of Capital Sssets:

  4. Type of Capital Gains:

  5. Transfer of Capital Assets to arise Capital Gain

  6. Capital Gain should arise in the previous year in which Transfer took place.

Types of Capital Assets for Computing ‘Capital Gain’

  1. Short-Term Capital Asset - STCA [Section 2(42A)]

  2. Long-Term Capital Asset - LTCA [Section 2(29A)]

  3. Meaning of Capital Assets in Graphical Chat (Section 2(14)

Computation Of ‘Period Of Holding of an Asset' for Computing Gapital Gain [Explanation 1(i) to Section 2(42A)]

  1. The period of Holding of an Asset [Explanation 1(i) to Section 2(42A)] :

  2. Holding period in case of Shares or any other Security [Explanation 1(i)(e) and (f)]

Transfer Of A Capital Asset [Section 2(47)] for Computing Capital Gain

  1. What is Transfer of Capital Assets [Section 2(47)]:

  2. Transactions Not regarded as Transfer of Capital Assets [Sections 46 and 47]:

  3. Transfer in case of Immovable and Movable Property

  4. Transfer of Capital Asset in Table Chat Format [Section 2(47)]

Transactions Not regarded as ‘Transfer’ for Computing Capital Gain [Section 46 and 47]

For the purpose of Section 45, the following transactions are not regarded as transfers (in other words, in the following cases, there is no Capital Gain)—

 

Method of Computing Capital Gain [Section 48]

A format to compute the Capital Gain under Section 48 is given here ...

 

Deemed Cost of Acquisition of Asset for Computing Capital Gain

Deemed Cost of Acquisition of Assets for Computing Capital Gain and all the provisions under sub-clause of Section 49 has been described ...

[Section 55(2)] : Cost of Acquisiton of Assets for Computation of Capital Gain

  1. Cost of Acquisition being the Fair Market Value as on April 1, 2001 -

  2. Cost of acquisition of goodwill of a business or a trade mark or brand name associated with business or right to manufacture, produce or process any article or things or right to carry on any business or profession, tenancy rights, stage carriage permits or loom hours [Section 55(2)(a)]:

  3. Cost of Acquisition of Right Shares [Section 55(2)(aa)]:

  4. Cost of Acquisition of Bonus Shares or any other Financial Asset allotted without payment [Section 55(2)(aa)(iiia)]:

  5. Cost of Acquisition of Depreciable Assets [Section 50]:

  6. Compulsory Acquisition of a Capital Asset -

 

Capital Gain in various Special Cases - How to Find Out or Calculate

  1. Capital Gain from Zero Coupon Bonds

  2. Capital Gain in case of amount Received from an Insurer on account of Damage or Destruction of any Capital Asset [Section 45(1A)]:

  3. Capital Gain in the case of Transfer of Depreciable Assets [Section 50] -

  4. Capital Gain on Conversion of Capital Asset into Stock-in-Trade [Section 45(2)]-

  5. Capital Gain on Transfer of Capital Asset by a Partner/Memeber to a Firm/AOP/BOI as Capital contribution [Section 45(3)]-

  6. Capital Gain on Distribution of Capital Assets by a Firm, AOP/BOI to Partners at the time of Dissolution [Section 45(4)]-

  7. Capital Gain on Compulsory Acquisition of a Capital Asset [Section 45(5)]-

  8. Computation of Capital Gains in case of Joint Development Agreement [Section 45(5A)] [W.e.f. A.Y. 2018-19]

  9. Capital Gain on Conversion of Debentures / Bonds into Shares [Section 47(x), 49(2A) and rule 8AA] :

  10. Capital Gain on Transfer of Shares / Debentures in the hands of Non-Residents (Proviso 1 to Section 48 and Rule 115A) :

  11. Capital Gain on Transfer of Self-Generated Capital Assets :

  12. Capital Gain on Transfer of Bonus Shares -

  13. Capital Gain on Transfer of Right Entitlement -

  14. Capital Gain on Transfer of Securities in Demat Form -

  15. Capital Gains on Distribution of Assets by Companies in Liquidation [Section 46]:

  16. Computation of Capital Gains in the case of Transfer of Land and Building or in Real Estate Transactions [Section 50C] -

  17. Capital Gains on Purchase by Company of its Own Shares or Other Specified Securities [Section 46A]:

  18. Capital Gain on Sale of Land and Building to be computed separately in case of Building Constructed by the Assessee:

 

Capital Gains Accounts Scheme, 1988.

Salient Features of Capital Gains Accounts Scheme, 1988 are given ...

 

Types of Capital Gain

  1. Type of Capital Gains:

  2. Types of Capital Sssets:

  3. Computation of Tax on Short-Term Capital Gain if Security Transaction Tax (STT) is applicable (Section 111A).

  4. Computation of Tax on Long-Term Capital Gain

 

Tax on Long-Term Capital Gain in certain Cases (Section 112A)

  1. Conditions to be satisfied for applicability of Section 112A [Section 112A(1)]

  2. Tax Computation on Long-term Capital Gain under Section 112A

  3. Mode of Computation of Cost Of Acquisition for Computing Long-term Capital Gain under Section 112A [Section 55(2)(ac)] :

  4. Important Points on Computation of Tax on Long-term Capital Gain under Section 112A

 

Exemption of Capital Gains under Section 10 and 115JG

  1. Capital Gain on Transfer of US64 [Section 10(33)]

  2. Long-Term Capital Gain on Transfer of BSE-500 Equity Shares [Section 10(36)]

  3. Capital Gain on Compulsory Acquisition of Urban Agricultural Land [Section 10(37)]

  4. Tax Incentive for the Development of Capital of Andhra Pradesh [Section 10(37A)]

  5. Capital Gain Exemption Under Section 115JG(1)

  6. Compensation under Section 96 of RFCTLARR Act. 2013

Exemption of Capital Gains under Sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB

(Section 54) : Exemption of Capital Gains from the Transfer of Residential House Property

  1. The Provisions of Section 54 towards Exemption of Capital Gains are given below –

  2. Scheme of Deposit in Capital Gains Accounts Scheme, 1988:

  3. A few points which are relevant for availing Exemption under Section 54 are given below-

(Section 54B) : Exemption of Capital Gain on Transfer of Land used for Agricultural Purposes

For the purpose of Section 45, the following transactions are not regarded as transfers (in other words, in the following cases, there is no Capital Gain)—

(Section 54D) : Exemption of Capital Gains on Compulsory Acquisition Of Land And Buildings forming part of Industrial Undertaking

The Provisions of Section 54D towards Exemption of Capital Gains on Compulsory Acquisition Of Land And Buildings forming part of Industrial Undertaking are given :

(Section-54EC) : Exemption of Capital Gain on Transfer of any Long Term Capital Asset on the basis of Investment in certain Bonds

The Provisions of Section 54EC towards Exemption of Capital Gains on Transfer of any Long Term Capital Asset on the basis of Investment in certain Bonds are given –

 

(Section 54EE) : Capital Gain not to be charged on Investment in Units of a Specified Fund

The Provisions of Section 54EE towards Exemption of Capital Gain not to be charged on Investment in Units of a Specified Fund are given –

 

[Section 54F] : Exemption of Capital Gain on Transfer Of Long-Term Capital Assets other than a House Property

  1. The Provisions of Section 54F towards Exemption of Capital Gains on Transfer Of Long-Term Capital Assets other than a House Property are given below –

  2. Scheme of Deposit in Capital Gains Accounts Scheme, 1988 :

  3. Consequences where the amount deposited in the Capital Gains Accounts Scheme is not utilised, wholly or partially, for the purchase or the construction of a residential house within the specified period:

  4. Consequences where the new house is transferred within a period of 3 years of its purchase or construction :

  5. Consequences where the assessee purchases, within a period of two years of the transfer of the original asset, or constructs, within a period of 3 years of transfer of such an asset, a residential house other than the new house bought / constructed, whose income is chargeable under the head Income from House Property:

 

[Section 54G] : Capital Gain on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas :

  1. The Provisions of Section 54G towards Exemption of Capital Gains on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas are given below –

  2. How much is Exempt (Quantum of Deduction):

  3. Scheme of Deposit in Capital Gains Accounts Scheme, 1988:

 

[Section 54GA] : Exemption of Capital Gain on transfer of assets in case of shifting of Industrial Undertaking from an urban area to any Special Economic Zone (SEZ)

The Provisions of Section 54GA towards Exemption of Capital Gain are given below –

 

(Section 54GB) : Exemption of Long term Capital Gain Tax on Transfer of Residential Property if Net Consideration is Invested in the Equity Shares of a new Start-up SME Company :

  1. Essential conditions to be satisfied to get Exemption Under Section 54GB :

  2. Consequence if equity shares or new asset is transferred within a period of 5 years from the date of its acquisition:

  3. Scheme of Deposit in Capital Gains Accounts Scheme, 1988:

  4. Consequences if the amount deposited in deposit scheme is not utilized for purchase of new asset:

 

(Section 54H) : Extension of time limit for acquiring new Asset or Depositing or Investing amount of Capital Gain, in case of Compulsory Acquisition :

The cumulative impact of Sections 45(5) and 54H is given here ...

 
 
 
 
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