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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)]

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

Case

Exclusion / Inclusion of Period

(i) Shares held in a company in liquidation

Exclude the period subsequent to the date of liquidation

(ii) Property acquired in any mode given under section 49(1) (e.g. by way of gift will, etc.)

Include the holding period of previous owner also.

(iii) Shares in an Indian Amalgamated Company acquired in a scheme of Amalgamation

Include the holding period of shares in the Amalgamating Company by the Assessee.

(iv) Shares in Indian Resulting company acquired in case of demerger

include the holding period of shares in the Demerged Company by the Assessee

(v) (a) Trading or clearing rights of recognised stock exchange pursuant to its demutualisation or corporatisation

Include the period for which the person was a member of the recognised stock exchange in India

(b) equity shares in a company acquired by a person pursuant to the demutualisation or corporatisation of recognised stock exchange

Include the period for which the person was a member of the recognised stock exchange in India

(vi) Capital asset, being a unit of a business trust, allotted pursuant to transfer of share or shares as referred to in section 47(xvii)

Include the period for which the share or shares were held by the assessee.

(vii) Unit or units, which becomes the property of the assessee in consideration of a transfer referred to in section 47(xviii)

Include the period for which the unit or units in the consolidating scheme of the mutual fund were held by the assessee

(ix) Share or debenture of a company, which becomes the property of the assessee in the circumstances mentioned in section 47(x) of the Act. (le. conversion of bonds or debentures into shares or debentures of the same_company)

Include the period for which the bond, debenture, debenture-stock or deposit certificate, as the case may be, was held by the assessee prior to the conversion.

(x) In the case of a capital asset, being equity shares in a company, which becomes the property of the assessee in consideration of a transfer referred to in section 47(xb) (i.e. conversion of preference share into equity share)

Include the period for which the preference shares were held by the assessee

(xi) In the case of a capital asset, being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in section 47(xix) (i.e. transfer of units held in the consolidating plan of a mutual fund scheme to consolidated plan of the scheme).

Include the period for which the unit or units in the consolidating plan of a mutual fund scheme were held by the assessee

 

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

The period of Holding , in the following circumstances will be computed as under :

1.

Right to subscribe to shares or any other securities(may be called as financial assets subscribed to by the assessee on the basis of right to subscribe to such financial assets.

The period shall be reckoned from the date of allotment of such financial asset.

2

Right to subscribe to share or any other securities acquired by a person in whose favour the right has been renounced by the existing holder.

—do——

3

Period of holding of the right by a person who has renounced the right,

The period shall be reckoned from the date of offer of such right by the company or institution to the date of renouncemern, which in normal circumstances will be short-term.

4

Period of holding of a financial asset allotted without any payment and on the basis of holding of any other financial asset e.g. bonus shares.

The period will be reckoned from the dare of allotment of such financial asset (not from the date of allotment of the original shares).

5.

Period of holding of specific security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at a concessional rate to his employees (including former employees).

The period shall be reckoned from the date of allotment or transfer of such specific security or sweat equity share.

6.

Share or shares of a company, which is acquired by the non-resident assessee on redemption of Global Depository Receipts referred to in section 11 5AC( 1 )(b)

The period shall be recknoned from the date on which a request for such redemption was made

 

Related Topics....Under the head 'Capital Gain'

Capital Assets, Capital Gain & Transfer of Capital Assets for Taxation of 'Capital Gain'
Types of Capital Assets for Computing ‘Capital Gain’
Computation Of ‘Period Of Holding of an Asset' for Computing Gapital Gain [Explanation 1(i) to Section 2(42A)]
Transfer Of A Capital Asset [Section 2(47)] for Computing Capital Gain
Transactions Not regarded as ‘Transfer’ for Computing Capital Gain [Section 46 and 47]
Method of Computing Capital Gain [Section 48]
Deemed Cost of Acquisition of Asset for Computing Capital Gain
[Section 55(2)] : Cost of Acquisiton of Assets for Computation of Capital Gain
Capital Gains Accounts Scheme, 1988.
Types of Capital Gain
Tax on Long-Term Capital Gain in certain Cases (Section 112A)
Exemption of Capital Gains under Section 10 and 115JG

Exemption of Capital Gains under Sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GB anf 54H

(Section 54) : Exemption of Capital Gains from the Transfer of Residential House Property
(Section 54B) : Exemption of Capital Gain on Transfer of Land used for Agricultural Purposes
(Section 54D) : Exemption of Capital Gains on Compulsory Acquisition Of Land And Buildings forming part of Industrial Undertaking
(Section-54EC) : Exemption of Capital Gain on Transfer of any Long Term Capital Asset on the basis of Investment in certain Bonds
(Section 54EE) : Capital Gain not to be charged on Investment in Units of a Specified Fund
[Section 54F] : Exemption of Capital Gain on Transfer Of Long-Term Capital Assets other than a House Property
[Section 54G] : Capital Gain on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas :
[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)
(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 :
(Section 54H) : Extension of time limit for acquiring new Asset or Depositing or Investing amount of Capital Gain, in case of Compulsory Acquisition :

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:

 
 
 
 
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