Basic Concepts
Section 45 of the Income Tax Act states that any gains arising from transfer of a capital asset shall be chargeable under the head ‘capital gains’ in the previous year when transfer takes place.
The important constituents under this head are – capital asset, transfer, sale consideration, cost of acquisition and the date of purchase and transfer.
Classification of Capital Assets
| Heading | Subheading |
|---|---|
| Definition | As per Section 2(14) of the Income-tax Act, capital asset means property of any kind, held by an assessee, whether or not connected with his business or profession. |
| Inclusions | All kinds of properties, whether movable, immovable, tangible or intangible, including rights of management or control of an Indian company or any other right is a capital asset. Business undertaking, partner’s share in a firm, a route permit, a leasehold right, right to get conveyance executed, right to subscribe shares of a company, goodwill, license to manufacture, gold, jewellery, securities, etc., are also included. |
| Exclusions |
- Stock-in-trade, consumable stores or raw material held for the purpose of business or profession
- Movable property held for personal use of the assessee or any member of his family, dependent on him, such as wearing apparel, furniture, car, scooter, TV, refrigerator, musical instruments, gun, revolver, generator, etc.
- Agricultural land in India, satisfying certain conditions as to its location, the actual cultivation etc. will not be considered as capital asset.
- Bonds such as 6% Gold Bonds,1977, 7% Gold Bonds, 1980, National Defense Gold Bonds, 1980, Special Bearer Bonds, 1991, Gold Deposit Bonds issued under Gold Deposit Scheme, 1999, Deposit certificates issued under the Gold Monetization Scheme, 2015
- The personal effects such as jewellery, precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel, archaeological collections, drawings, paintings, sculptures, any work of art are not considered as personal effects and any gain arising from their sale shall be charged to tax.
Classification | Depending on the period of holding, an asset can be classified as long-term capital asset or short-term capital asset.
Types of Capital Asset-
Short-term vs. Long-term Capital Asset
Capital assets are categorized into short-term and long-term for the purpose of computing capital gains. Short-term capital assets are subject to a higher incidence of tax compared to long-term capital assets. The distinction between the two is based on the period for which the asset is held before its transfer.
General Rule
A capital asset is considered short-term if it is held for not more than 36 months before transfer. A capital asset is considered long-term if it is held for more than 36 months before transfer.
Exceptions
Exception 1: Unlisted shares of a company and immovable property (land or building) are treated as short-term capital assets if held for not more than 24 months before transfer.
Exception 2: Listed shares of a company, listed securities (debentures, bonds, derivatives, government securities, etc.), units of UTI, units of Equity Oriented Fund, and zero coupon bonds (listed or unlisted) are treated as short-term capital assets if held for not more than 12 months before transfer.
Exception 3: Depreciable assets are always treated as short-term capital assets, regardless of the period of holding.
Table 8.1: Overview of holding periods of capital assets
| Nature of Security | Holding should be more than the following period to be treated as long-term capital asset |
|---|---|
| Listed Securities | Equity Shares: 12 months, Units of Equity Oriented Funds: 12 months, Units of UTI: 12 months |
| Unlisted Securities | Equity Shares: 24 months, Preference Shares: 24 months |
| Units of Business Trust | 36 months |
| Other Units | 36 months |
| Debentures | Listed: 12 months, Unlisted: 36 months |
| Government Securities | Listed: 12 months, Unlisted: 36 months |
| Zero coupon bonds | Listed: 12 months, Unlisted: 12 months |
| Other Bonds | 12 months |
| Immovable property | Land and building both: 24 months |
| Any other asset | 36 months |
Special Provisions for Calculating Period of Holding of Capital Assets
The period of holding of a capital asset is calculated from the date of purchase or acquisition until the date of transfer. However, in certain cases, the period of holding of a capital asset is determined in accordance with special provisions.
Special Provisions for Calculating Period of Holding of Capital Assets
| Type of Security | Period of Holding |
|---|---|
| Listed Shares sold through broker | Date of broker’s note to be considered as date of purchase and sale provided it is followed up by delivery of shares and transfer of deed. |
| Listed shares transferred directly between parties (not through stock exchange) | Period of holding to be counted from date of purchase to date of contract of sale as declared by the parties, provided it is followed by actual delivery of shares and transfer deed. |
| Securities held in Demat form | Period of holding is determined as per First-in-First-out (FIFO) method, i.e., the securities that first entered into the Demat account is deemed to be the first sold out. |
| Bonus shares | Period of holding is reckoned from date of allotment of bonus shares. |
| Sweat Equity shares or ESOPs | Period of holding is reckoned from date of allotment of Sweat equity shares or shares issued on exercise of ESOPs. |
| Conversion of preference shares into equity shares | The period for which the preference shares were held by the assessee is also included in the period of holding of equity shares. |
| Conversion of bonds/debentures/debenture-stock/deposit certificates into shares or debentures of that company | The period of holding of the original asset shall also be taken into consideration while determining the period of holding of converted assets. |
| Right Shares | Period of holding is counted from date of allotment of right shares. |
| Renouncement of right to subscribe to shares or any other security of a company | Period of holding is reckoned from the date of offer made by the company to the date of renouncement. |
| Shares of a company in liquidation | Period subsequent to the date on which the company goes into liquidation is excluded while computing the period of holding. |
| Shares of an amalgamated company | Period of holding of the original shares, held in the amalgamating company, is also included in computing the period of holding of the shares in the amalgamated company. |
| Shares of a resulting company in case of demerger | Period of holding is counted from the date of holding of the shares in the demerged company and not from the date of allotment of the shares in the resulting company. |
| Acquisition by operation of law in the circumstance specified in Section 49(1) | The period of holding of the last previous owner who acquired the asset by way of purchase is also included for the purpose of determining the period of holding by the assessee. |
| Conversion of stock into capital asset | Period of holding shall be reckoned from the date of conversion. |
| Trading or clearing rights or equity shares acquired on demutualization or corporatization of recognized stock exchange in India | The period for which the person was a member of the recognized stock exchange, immediately prior to such demutualization or corporatization, is also included to determine the period of holding. |
| Units of business trust allotted on account of transfer of shares of special purpose vehicle (SPV) | The period for which the shares of SPV were held. |
Topic: Transfer of Property
| Subheading | Notes |
|---|---|
| The passing of property or rights in a property from one person to another. | |
| Sale of asset | Voluntarily entered transaction between buyer and seller for an agreed price. |
| Exchange of asset | Two persons mutually transfer ownership of one thing for the ownership of another thing. |
| Relinquishment of asset | The owner withdraws from the property and abandons their rights to it. |
| Extinguishment of rights | The rights of a person to the capital asset have extinguished, not the asset itself. |
| Conversion of asset into stock-in-trade | When a person converts their capital asset into stock-in-trade of a business. |
| Maturity or redemption of zero-coupon bonds | The redemption or maturity of zero-coupon bonds issued by infrastructure capital companies or infrastructure capital funds is considered transfer. |
| Indirect transfer | Transfer of shares or interest in a foreign company/entity that derives its value substantially from assets located in India. |
Transactions not regarded as transfer
The following table provides a summary of transactions that are not regarded as transfers for the purpose of capital gains, as per the Income-tax Act.
| No. | Type of Transaction | Description |
|---|---|---|
| (i) | Partition of a Hindu Undivided Family | Distribution of capital asset during the total or partial partition of a Hindu Undivided Family |
| (ii) | Gift or Will or Irrevocable Trust | Transfer of a capital asset as a gift, will or irrevocable trust |
| (iii) | Transfer between Holding and Subsidiary Company | Transfer of a capital asset from a holding company to its Indian subsidiary company, or from a subsidiary company to its Indian holding company, if the specified conditions are satisfied |
| (iv) | Transfer in Business Restructuring | Transfer of capital assets in a scheme of amalgamation, demerger or re-organization of co-operative banks, if the specified conditions are satisfied |
| (v) | Transfer among Non-Residents | Transfer of securities by a non-resident to another non-resident, such as GDR of an Indian company, Rupee Denominated Bond of an Indian company, bonds, GDR or Rupee Denominated Bond, derivative or other notified securities on a recognized stock exchange located in any International Financial Services Centre, or Government Security outside India through an intermediary dealing in settlement of securities |
| (vi) | Redemption of Sovereign Gold Bonds | Redemption of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme by an individual |
| (vii) | Conversion of Securities | Conversion of certain securities such as bonds, debentures, debenture-stock or deposit certificate of a company into shares or debentures of that company, conversion of Foreign Currency Exchange Bonds (FCEB) issued to non-residents by Indian companies into shares of any company, and conversion of preferences shares into equity shares of that company |
| (viii) | Transfer of Membership Rights of Stock Exchange | Transfer of membership right of a recognized stock exchange in India for acquisition of shares and trading or clearing rights in that stock exchange in accordance with a scheme for demutualization or corporatization duly approved by the SEBI |
| (ix) | Transfer of Land of a Sick Industrial Company | Transfer of land of a sick industrial company under a scheme of Sick Industrial Companies (Special Provisions) Act, 1985 |
| (x) | Succession of Entities | Succession or conversion of entities such as a partnership firm, a sole proprietary concern, a private company, or an unlisted public company into a limited liability partnership, or where an AOP or BOI transfers any capital asset to a company in the course of demutualization or corporatization of a recognized stock exchange in India |
| (xi) | Transfer of Shares of Indian Company to Business Trust | Transfer of shares of an Indian company, being Special Purpose Vehicle (SPV), to a business trust in exchange of units allotted by that trust to the transferor |
| (xii) | Consolidation of Mutual Fund | Consolidation of units of different similar schemes of transfer of mutual funds |
| (xiii) | Lending of Securities | Lending of securities under the Securities Lending Scheme of SEBI through approved intermediary for a specified period with the condition that the borrower would return equivalent securities of the same type or class at the end of the specified period along with interest |
| (xiv) | Rollover of Fixed Maturity Plans | Rollover of Fixed Maturity Plans (FMPs) in accordance with the SEBI regulation, which will not amount to transfer as the scheme remains the same |
| (xv) | Distribution in case of liquidation | Any distribution of assets in kind by a company to its shareholders at the time of liquidation is not treated as transfer of asset by the Company. However, in this case, the shareholders are liable to pay tax on any capital gains arising there from in accordance with Section 46. |
Computation of Capital Gains from Transfers-
Computation of capital gains from transfer refers to the process of calculating the taxable profit or gain that arises from the sale of a capital asset. The computation of capital gains is different for short-term and long-term assets due to the availability of indexation benefit in the latter case.
- In case of short-term capital gains:
Short-term capital gains arise when a capital asset is held for less than 36 months before its sale. The computation of short-term capital gains is as follows:
- Full value of consideration received on the sale of the asset
- Less: Expenditure incurred wholly and exclusively in connection with the transfer
- Less: Cost of acquisition of the asset
- Less: Cost of improvement of the asset
- Less: Exemption under Sections 54B, 54D, 54G and 54GA
The difference between the full value of consideration and the above deductions gives the short-term capital gain or loss.
- In case of long-term capital gains:
Long-term capital gains arise when a capital asset is held for more than 36 months before its sale. The computation of long-term capital gains is as follows:
- Full value of consideration received on the sale of the asset
- Less: Expenditure incurred wholly and exclusively in connection with the transfer
- Less: Indexed cost of acquisition of the asset
- Less: Indexed cost of improvement of the asset
- Less: Exemption under Sections 54 to 54GB
Calculation of Full Value of Consideration:
The full value of consideration is the amount of consideration received or receivable by the owner of an asset in exchange for the transfer of such an asset. Here are some key points to note about its calculation:
- Calculation in commercial sense: As per the Income Tax Act, the full value of consideration is not defined, and thus it should be understood in a commercial sense according to the prevalent usage.
- Received in cash or kind: The consideration may be received in cash or kind, and if it is received in kind, then the fair market value of such assets is taken as the full value of consideration.
- Special Cases: In some cases, the calculation of the full value of consideration is different from the general principle, such as in the conversion of capital asset into stock-in-trade, transfer of securities allotted under ESOPs as a gift or under an irrevocable trust, redemption of rupee denominated bonds by non-residents, transfer of unquoted shares for less than its fair market value, transfer of land or building or both, capital asset distributed on liquidation of a company, and when the consideration for transfer is not ascertainable.
- Calculation in Special Cases: The full value of consideration in these cases shall be calculated as per the specific rules applicable to each case. For instance, in the case of transfer of land or building or both, the actual consideration or valuation adopted for stamp duty purposes, whichever is higher, is taken as the full value of consideration. Similarly, in the case of transfer of unquoted shares for less than its fair market value, the actual consideration or the fair market value of such shares on the valuation date computed as per section 50CA, whichever is higher, is taken as the full value of consideration.
Expenditure allowed as deduction in computing capital gain
Particulars Expenditure amount (Rs.)
Brokerage or commission
Stamp duty
Registration fee
Travelling expenses
Legal expenses
Other expenses incurred wholly and exclusively in connection with transfer
Note: No deduction allowed for sum paid on account of STT, CTT while calculating capital gains from sale of securities.
Cost of Acquisition-
Cost of acquisition is the amount of money that an investor or taxpayer pays to acquire a particular asset, such as a stock, bond, mutual fund, or real estate property. The cost of acquisition is an important concept in taxation as it determines the amount of capital gains or losses when an asset is sold or disposed of.
In India, the cost of acquisition of various assets is determined based on different rules and provisions. For instance, the cost of acquisition of listed equity shares, units of equity-oriented mutual funds or units of business trusts that were acquired before 31st January 2018 and sold after 1st April 2018 is the higher of the actual cost of acquisition or the fair market value as on 31st January 2018 or the full value of consideration, whichever is lower.
The cost of acquisition for any other asset, which was acquired on or before 31st March 2001, is the price actually paid for acquisition or the fair market value as on 1st April 2001, whichever is higher. However, for assets acquired after 1st April 2001, the cost of acquisition is the price actually paid for acquisition.
The rules for determining the cost of acquisition for other types of assets, such as right shares, bonus shares, sweat equity shares, and shares allotted under ESOP, are also different.
It is important to determine the correct cost of acquisition as it directly impacts the capital gains or losses that an individual has to pay taxes on. Inaccurate calculation of cost of acquisition can result in an incorrect amount of tax liability and may lead to penalties and interest charges.
Indexed cost of Acquisitions-
Indexed cost of acquisition is a method used to calculate the cost of a capital asset that adjusts for inflation. The calculation involves two steps: first, calculate the actual cost of acquisition of the capital asset, and second, multiply this cost by the Cost Inflation Index (CII) of the year in which the asset is being transferred and divide by the CII of the year in which the asset was first held by the taxpayer or the CII of 2001-02, whichever is later.
The benefit of indexation is not available for certain long-term capital assets, including listed equity shares, units of equity-oriented mutual funds or units of business trust, except that taxable under Section 112A , bond or debenture ( except Capital Indexed Bonds and Sovereign Gold Bonds ) , investment in securities by non-residents in foreign currency, depreciable assets, slump sale, units purchased in foreign currency by offshore funds, securities as referred to in Section 115AD purchased by FPIs, GDRs purchased in foreign currency, and unlisted securities purchased by a non-resident.
Cost of Improvement-
| Topic: Cost of Improvement |
|---|
| Definition: All expenditure of a capital nature incurred on or after 01-04-2001 in making any addition or alterations to the capital asset either by the assessee or the previous owner. |
| Capital expenditure: All capital expenditure incurred on or after 01-04-2001 shall be deducted while calculating the capital gains. |
| Pre-2001 expenditure: In case capital asset is acquired by the assessee before 01-04-2001, any cost of improvement incurred prior to 01-04-2001, shall be ignored. |
| Exclusion: Cost of improvement shall not include such expenditure which is deductible in computing the income chargeable under the head ‘Income from House Property’, ‘Profits and Gains of Business or Profession’, or ‘Income from Other Sources’. |
Conversion of Capital Gains Earned in Foreign Currency into Indian Rupees:
| Aspect | Details |
|---|---|
| Conversion of Income | Any income earned in foreign currency by a resident or non-resident person shall be converted into Indian Rupees as per the prevailing conversion rate. |
| Capital Gains for Non-Resident Investors | Capital gains from the transfer of shares or debentures of an Indian company by a non-resident investor shall be computed first in foreign currency, initially used to purchase the securities, then converted into Indian currency. The same provision applies to every reinvestment of sale proceeds into Indian company shares or debentures. |
| Sales Consideration | Converted at the average rate of foreign currency as on the date of transfer. |
| Cost of Acquisition | Converted into foreign currency at the average rate as on the date of acquisition of share or debenture, without indexation benefits. |
| Expenditure in Connection with Transfer | Converted at the average rate of foreign currency as on the date of transfer. |
| Capital Gains | Resultant capital gains computed in foreign currency re-converted into INR at the Telegraphic Transfer (TT) buying rate of such currency on the date of transfer of the capital asset. |
| Other Capital Gains | Capital gains arising to a resident or non-resident person in foreign currency shall be converted into Indian Rupees at the rate of exchange as on the last day of the month preceding the month in which the capital asset is transferred. |
Tax Rates on Capital Gains-
Table 1: Tax Rates on Short Term Capital Gains
| Type of Assessee | Tax Rate |
|---|---|
| Individual/HUF | As per slab rates |
| Company | 25% |
| Partnership Firm | 30% |
Table 2: Tax Rates on Long Term Capital Gains
| Type of Asset | Tax Rate (with Indexation) | Tax Rate (without Indexation) |
|---|---|---|
| Listed Securities (other than units) | 20% | 10% |
| Zero Coupon Bonds | 20% | 10% |
| Other Assets | 20% | 20% |
Table 3: Tax Rates on Long Term Capital Gains under Section 112A
| Type of Asset | Tax Rate |
|---|---|
| Equity shares or units of an equity-oriented fund | 10% |
| Other Listed Securities and Zero Coupon Bonds | 20% |
Note: The long term capital gains tax under section 112A will apply only if the gains exceed Rs. 1,00,000 in a financial year.
Table: Summary of Taxation of capital gains on Equity shares/ Equity oriented mutual funds, listed or unlisted (Section 111A and Section 112A)
| Sr. No. | Equity Shares or Equity Oriented Mutual funds listed on Indian Stock exchanges or unlisted Equity oriented mutual funds | Conditions to be satisfied | Residents (Tax Rates)# | Non-Residents (Tax Rates)@ |
|---|---|---|---|---|
| 1 | Equity Shares of Indian Company listed on Indian Stock Exchange | Long-term – held for more than 12 months | Where STT is paid on both acquisition and sale or STT is not paid on acquisition under certain circumstances | No tax calculated on Initial Rs. 1 lakh (overall along with item 3 and 5). 10% plus applicable surcharge and cess payable on balance capital gains. (112A) |
| 2 | Equity oriented Mutual funds listed on Indian stock exchange such as Nifty Index ETF etc or non-listed Equity Oriented Mutual funds or Equity oriented high premium ULIPs | Long-term – held for more than 12 months | Where STT is paid on Transfer of the Equity Oriented Mutual fund or high premium equity oriented ULIPs | No tax calculated on Initial Rs. 1 lakh (overall along with item 1 and 5). 10% plus applicable surcharge and cess payable on balance capital gains (112A) |
| 3 | Units of REITs/InVITS | Short-term – held for 36 months or less | Where STT is paid on transfer of the units | 15% plus applicable surcharge and cess. (Section 111A) |
Table-: Summary of Taxation of Capital Gains on Listed Investments (Apart from Section 111A and Section 112A)
- Other Units listed on the Indian Stock exchange such as Long term (held for more than 36 months):
- For residents: 20% after indexation plus applicable surcharge plus cess (section 112).
- For non-residents: 20% after indexation plus applicable surcharge plus cess (112).
2. Other securities listed on Indian Stock Exchange such as Debentures, bonds, preference shares, listed equity shares transferred without payment of STT, etc. except Sovereign gold bonds:
- For long term (held for more than 12 months):
- For residents: 20% after indexation or 10% before indexation, whichever is less – plus applicable surcharge plus cess (112).
- For non-residents: 20% after indexation or 10% before indexation, whichever is less – plus applicable surcharge plus cess (112), except in the case of shares or debentures of an Indian company bought in foreign currency where the capital gains are calculated in the prescribed manner in foreign currency, and tax rate of 10% is applicable.
- For short term (held for 12 months or less):
- Treated as regular income, and normal tax rates apply.
3. Sovereign Gold Bonds (all are listed on Indian Stock Exchanges):
- For long term (held for more than 12 months):
- If sold on the exchange or otherwise, the tax is 20% after indexation or 10% before indexation, whichever is less – plus applicable surcharge plus cess (112). Redemption is not regarded as transfer, and hence not taxable if redeemed.
- For non-residents: If bought when resident and sold on the exchange when non-resident, then sold on the exchange or otherwise, the tax is 20% after indexation or 10% before indexation, whichever is less – plus applicable surcharge plus cess (112). Redemption as allowed in the scheme is not regarded as transfer, and hence not taxable if redeemed.
- For short term (held for 12 months or less):
- Treated as regular income, and normal tax rates apply if sold on exchange or otherwise. Redemption is not regarded as transfer and hence not taxable if redeemed.
Note that an initial exemption limit of 2.50 lakhs is available to NRIs also for this Income. Indexation is not allowed on Debentures or Bonds. However, indexation is allowed on Sovereign Gold Bonds.
Table: Summary of Taxation of capital gains on unlisted investments
| Sr. No. | Type of Asset | Residents (Tax Rates)# | Non-Residents (Tax Rates)@ |
|---|---|---|---|
| 1 | Unlisted Shares in a Company Long term – held for more than 24 months | 20% after indexation plus applicable surcharge plus cess (112) | 10% without indexation plus applicable surcharge plus cess (112(c)(iii)) |
| [NOTE: Indexation not allowed.] | |||
| 190 | |||
| Short term – held for 24 months or less | Treated as regular income and normal tax rates apply | ||
| 2 | Land and Building Long term – held for more than 24 months | 20% after indexation plus applicable surcharge Plus cess (112) | 20% after indexation plus applicable surcharge Plus cess (112) |
| Short term – held for 24 months or less | Treated as regular income and normal tax rates apply | ||
| [NOTE: Initial exemption limit of 2.50 lakhs is also available to NRIs for this Income.] | [NOTE: Initial exemption limit of 2.50 lakhs is also available to NRIs for this Income.] | ||
| 3 | Unlisted mutual funds (other than equity oriented mutual funds) , other securities such as debentures , bonds, etc | Long term – held for more than 36 months | 20% after indexation plus applicable surcharge plus cess (112) |
| 10% without indexation plus applicable surcharge plus cess (112(c)(iii)) | [NOTE: Indexation not allowed.] | ||
| Short term – held for 36 months or less | Treated as regular income and normal tax rates apply | ||
| [NOTE: Initial exemption limit of 2.50 lakhs is also available to NRIs for this Income.] | [NOTE: Initial exemption limit of 2.50 lakhs is also available to NRIs for this Income.] | ||
| 4 | Any other Capital Asset Long term – held for more than 36 months | 20% after indexation plus applicable surcharge Plus cess (112) | 20% after indexation plus applicable surcharge Plus cess (112) |
| Short term – held for 36 months or less | Treated as regular income and normal tax rates apply | ||
| [NOTE: Initial exemption limit of 2.50 lakhs is also available to NRIs for this Income.] | [NOTE: Initial exemption limit of 2.50 lakhs is also available to NRIs for this Income.] |
Note:
- # Indexation is not relevant for short term capital gains. Capital gains will not be taxed to the extent by which all other taxable income falls short of minimum chargeable to tax – Rs. 2.50 lakhs/ Rs. 3 lakhs/Rs. 5 lakhs as applicable. Chapter VIA deductions are not available for special rate (112,112A or 111A) taxation.
- @ Rebate under section 87A not available to Non residents. Indexation is not relevant for short term capital gains. For investment in Share and debenture in Indian Company – If original investment made.
Exemption for capital gains-
| Section | Type of Assessee | Type of Original Capital Asset | Nature of Original Capital Asset | Nature of New Capital Asset | Time Limit Allowed for Investment |
|---|---|---|---|---|---|
| 54 | Individual and HUF | Long-term Capital Asset | Residential House Property | 1. Residential House in India, if capital gains do not exceed INR 2 cr, or 2 houses instead of 1 | To Buy: 1 Year before and 2 Years from the date of transfer; To Construct: 3 Years from the date of transfer |
| 54B | Individual and HUF | Short-term or Long-term | Agriculture Land, used for agriculture for 2 years | Agriculture Land | 2 Years from the date of transfer |
| 54D | Any Assessee | Short-term or Long-term | Land or Building forming part of Industrial Undertaking used in business for 2 years, acquired by way of compulsory acquisition | Land or Building to shift or set up a new Industrial Undertaking | To Buy or Construct: 3 Years from the date of compulsory acquisition |
| 54EC | Any Assessee | Long-term Capital Asset | Land or Building | Bonds of NHAI or REC | 6 Months from the date of transfer |
| 54EE | Any Assessee | Long-term Capital Asset | Any Capital Asset | Units of notified Fund | 6 Months from the date of transfer |
| 54F | Individual and HUF | Long-term Capital Asset | Any Capital Asset other than residential house | 1. Residential House in India, subject to prescribed conditions | To Buy: 1 Year before and 2 Years from the date of transfer; To Construct: 3 Years from the date of transfer |
| 54G | Any Assessee | Short-term or Long-term | Specified assets of Industrial Undertaking in urban area | Assets of Industrial Undertaking in non-urban area | 1 Year before and 3 Years from the date of transfer |
| 54GA | Any Assessee | Short-term or Long-term | Specified assets of Industrial Undertaking in urban area | Specified assets of Industrial Undertaking in SEZ | 1 Year before and 3 Years from the date of transfer |
| 54GB | Individual and HUF | Long-term Capital Asset | Residential Property, i.e., house or plot of land | Equity shares of eligible company or eligible start-up | To Buy shares: Before the due date for furnishing of return; To Buy new assets by the company: Within 1 year from the date of subscription of shares |
| 115F | Non-Resident Indian | Long-term Capital Asset | Shares of an Indian company, Debentures/Deposits of Indian Public Company or Government Securities purchased in foreign currency | Shares of an Indian company, Debentures/Deposits of Indian Public Company or Government Securities | 6 Months from the date of transfer |
Note: The Income-tax Act provides exemption from capital gains tax subject to certain key conditions, which are summarized in the table above. The type of assessee, original capital asset, nature of the original capital asset, nature of new capital asset, and time limit allowed for investment are the key parameters for each section.
