[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 –

1. Who can claim exemption :

Any Taxpayer.

2. Which specific asset is eligible for exemption :

On transfer of short-term/long-term capital assets being land, building, plant or machinery. These assets should be transferred in order to shift an industrial undertaking from an urban area to any special economic zone. The Special Economic Zone may be developed in any urban area or any other area.

  1. Any other area means an area not declared as an urban area.
  2. ‘Urban area’ means any such area within the limits of a municipal corporation or municipality, as the Central Government may, having regard to the population, concentration of industries, need for proper planning of the area and other relevant factors, by general or special order, declare to be an urban area for the purposes of this sub-section;
  3. “Special Economic Zone” means each Special Economic Zone notified under the proviso to subsection (4) of section 3 and sub-section (1) of section 4 of the Special Economic Zones Act, 2005 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone. [Section 2(za) of the Special Economic Zones Act, 2005].

3. Which asset the taxpayer should acquire to get the benefit of exemption :

Land, building, plant or machinery in order to shift undertaking to any special economic zone.

3. What is time-limit for acquiring the new asset :

New asset should be purchased within 1 year before transfer or within 3 years after transfer of the original asset.

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

Investment in the New Asset or Capital Gain,

whichever is lower.

5. Is it possible to revoke the exemption in a subsequent year :

If the new asset is transferred within 3 years of its acquisition, exemp tion will be taken back. For calculating capital gain on transfer of new asset, cost of acquisition will be calculated (as original cost of acquisition – exemption availed under section 54GA)

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