W.e.f. A/y 2006-07 this exemption has been introduced to encourage industrial Undertaking situated in an urban area to shift to a Special Economic Zone. This exemption is expected to help those industrial undertaking which may shift their premises from an urban area to a Special Economic Zone.
To avail this exemption, following points are to be noted :
1. There is a transfer of assets like land and building or any right in land and building, plant and machinery of an industrial undertaking situated in an urban area.
2. The above mentioned transfer has been made with the intention of shifting of an industrial undertaking from an urban area to a Special Economic Zone.
3. In connection with transfer of an industrial unit from an urban area to a Special Economic Zone, the assessee has set up an industrial unit in an Economic Zone within a period of one year before or 3 years after the date on which such transfer took place.
This means that the assessee has bought land or acquired or constructed a building, purchased plant and machinery or has shifted the original assets and has transferred the establishment from an urban area to a Special Economic Zone within the time frame of one year before and 3 years after the date on which the above mentioned transfer took place.
Amount of Exemption.
Least of following two amounts shall be the exemption
- Amount of Capital Gain earned on the transfer of Capital Asset.
- Amount spent on the purchase, construction etc. of new assets in a Special Economic Zone within specified time frame.
No transfer of new assets within 3 years.
New assets acquired by invested the amount of Capital Gain are not supposed to be transferred within 3 years from the date of their purchase, construction etc. and if transferred exemption allowed earlier u/s 54GA shall be withdrawn and so Capital Gain arising from such transfer and Capital Gain got exempted earlier, both will be taxed in the year in which transferred.