Income Tax Act, 2025
Section 3: Ins. by Act 13 of 2018, s. 21 (w.e.f. 12019).
3. Ins. by Act 13 of 2018, s. 21 (w.e.f. 12019).
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(b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer
of the original asset, so much of the capital gain as bears to the whole of the capital gain the same
proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital
gain, shall not be charged under section 45:
1[Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified
asset by an assessee during any financial year does not exceed fifty lakh rupees:]
2[Provided further that the investment made by an assessee in the long-term specified asset, from
capital gains arising from transfer of one or more original assets, during the financial year in which the
original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh
rupees.]
(2) Where the long-term specified asset is transferred or converted (otherwise than by transfer) into
money at any time within a period of three years from the date of its acquisition, the amount of capital
gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of
such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of
sub-section (1) shall be deemed to be the income chargeable under the head “Capital gains” relating to
long-term capital asset of the previous year in which the long-term specified asset is transferred or
converted (otherwise than by transfer) into money.
3[Provided that in case of long-term specified asset referred to in subclause (ii) of clause (ba) of the
Explanation occurring after sub-section (3), this sub-section shall have effect as if for the words “three
years”, the words “five years” had been substituted.]
Explanation.—In a case where the original asset is transferred and the assessee invests the whole or
any part of the capital gain received or accrued as a result of transfer of the original asset in any long-term
specified asset and such assessee takes any loan or advance on the security of such specified asset, he
shall be deemed to have converted (otherwise than by transfer) such specified asset into money on the
date on which such loan or advance is taken.
4[(3) Where the cost of the long-term specified asset has been taken into account for the purposes of
clause (a) or clause (b) of sub-section (1),—
(a) a deduction from the amount of income-tax with reference to such cost shall not be allowed
under section 88 for any assessment year ending before the 1st day of April, 2006;
(b) a deduction from the income with reference to such cost shall not be allowed under section
80C for any assessment year beginning on or after the 1st day of April, 2006.]
Explanation.—For the purposes of this section,—
(a) “cost”, in relation to any long-term specified asset, means the amount invested in such
specified asset out of capital gains received or accruing as a result of the transfer of the original
asset;
5[(b) “long-term specified asset” for making any investment under this section during the
period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007,
means any bond, redeemable after three years and issued on or after the 1st day of April, 2006,
but on or before the 31st day of March, 2007,—
if the cost of the long-term specified asset is less than the capital gain arising from the transfer
of the original asset, so much of the capital gain as bears to the whole of the capital gain the same
proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital
gain, shall not be charged under section 45:
1[Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified
asset by an assessee during any financial year does not exceed fifty lakh rupees:]
2[Provided further that the investment made by an assessee in the long-term specified asset, from
capital gains arising from transfer of one or more original assets, during the financial year in which the
original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh
rupees.]
Where the long-term specified asset is transferred or converted (otherwise than by transfer) into
money at any time within a period of three years from the date of its acquisition, the amount of capital
gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of
such long-term specified asset as provided in clause
or, as the case may be, clause
of
sub-section
shall be deemed to be the income chargeable under the head “Capital gains” relating to
long-term capital asset of the previous year in which the long-term specified asset is transferred or
converted (otherwise than by transfer) into money.
3[Provided that in case of long-term specified asset referred to in subclause
of clause
of the
Explanation occurring after sub-section
Where the cost of the long-term specified asset has been taken into account for the purposes of
clause
or clause
of sub-section
a deduction from the amount of income-tax with reference to such cost shall not be allowed
under section 88 for any assessment year ending before the 1st day of April, 2006;
a deduction from the income with reference to such cost shall not be allowed under section
80C for any assessment year beginning on or after the 1st day of April, 2006.]
Explanation.—For the purposes of this section,—
“cost”, in relation to any long-term specified asset, means the amount invested in such
specified asset out of capital gains received or accruing as a result of the transfer of the original
asset;
5[
“long-term specified asset” for making any investment under this section during the
period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007,
means any bond, redeemable after three years and issued on or after the 1st day of April, 2006,
but on or before the 31st day of March, 2007,—