Income Tax Act, 2025
Section 11: Subs. by Act 21 of 1979, s. 8, for “clause (va)” (w.e.f. 11979).
11. Subs. by Act 21 of 1979, s. 8, for “clause (va)” (w.e.f. 11979).
12. The words, brackets, letters and figure “or clause (a) or clause (b) of sub-section (3)” omitted by Act 11 of 1987, s. 22
(w.e.f. 11988).
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1[54EA. Capital gain on transfer of long-term capital assets not to be charged in the case of
investment in 2[specified securities].—(1) Where the capital gain arises from the transfer of a long-term
capital asset 3[before the 1st day of April, 2000] (the capital asset so transferred being hereafter in this
section referred to as the original asset) and the assessee has, at any time within a period of six months
after the date of such transfer, invested the whole or any part of the net consideration in any of the
4[bonds, debentures, shares of a public company or units of any mutual fund referred to in clause (23D)
of section 10,]specified by the Board in this behalf by notification in the Official Gazette (such assets
hereafter in this section referred to as the 2[specified securities]), the capital gain shall be dealt with in
accordance with the following provisions of this section, that is to say,—
(a) if the cost of the 2[specified securities] is not less than the net consideration in respect of the
original asset, the whole of such capital gain shall not be charged under section 45;
(b) if the cost of the 2[specified securities] is less than the net consideration in respect 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 2[specified securities] bears to the net consideration shall
not be charged under section 45.
(2) Where the 2[specified securities] are transferred or converted (otherwise than by transfer) into
money at any time within a period of three years from the date of their acquisition, the amount of capital
gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of
such 2[specified securities] as provided in clause (a) or clause (b) of sub-section (1) shall be deemed to be
the income chargeable under the head “Capital gains” relating to long-term capital assets of the previous
year in which the 2[specified securities] are transferred or converted (otherwise than by transfer) into
money.
Explanation.—In a case where the original asset is transferred and the assessee invests the whole or
any part of the net consideration in respect of the original asset in any 2[specified securities] and such
assessee takes any loan or advance on the security of such 2[specified securities], he shall be deemed to
have converted (otherwise than by transfer) such 2[specified securities] into money on the date on which
such loan or advance is taken.
(3) Where the cost of the 2[specified securities] has been taken into account for the purposes of
clause (a) or clause (b) of sub-section (1), a rebate with reference to such cost shall not be allowed under
section 88.
Explanation.—For the purposes of this section,—
(a) “cost”, in relation to any 2[specified securities], means the amount invested in such 2[specified
securities] out of the net consideration received or accruing as a result of the transfer of the original
asset;
(b) “net consideration”, in relation to the transfer of a capital asset, means the full value of the
consideration received or accruing as a result of the transfer of the capital asset as reduced by the
expenditure incurred wholly and exclusively in connection with such transfer.]
or clause
of sub-section
Where the capital gain arises from the transfer of a long-term
capital asset 3[before the 1st day of April, 2000] (the capital asset so transferred being hereafter in this
section referred to as the original asset) and the assessee has, at any time within a period of six months
after the date of such transfer, invested the whole or any part of the net consideration in any of the
4[bonds, debentures, shares of a public company or units of any mutual fund referred to in clause
of section 10,]specified by the Board in this behalf by notification in the Official Gazette (such assets
hereafter in this section referred to as the 2[specified securities]), the capital gain shall be dealt with in
accordance with the following provisions of this section, that is to say,—
if the cost of the 2[specified securities] is not less than the net consideration in respect of the
original asset, the whole of such capital gain shall not be charged under section 45;
if the cost of the 2[specified securities] is less than the net consideration in respect 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 2[specified securities] bears to the net consideration shall
not be charged under section 45.
Where the 2[specified securities] are transferred or converted (otherwise than by transfer) into
money at any time within a period of three years from the date of their acquisition, the amount of capital
gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of
such 2[specified securities] as provided in clause
or clause
of sub-section
shall be deemed to be
the income chargeable under the head “Capital gains” relating to long-term capital assets of the previous
year in which the 2[specified securities] are transferred or converted (otherwise than by transfer) into
money.
Explanation.—In a case where the original asset is transferred and the assessee invests the whole or
any part of the net consideration in respect of the original asset in any 2[specified securities] and such
assessee takes any loan or advance on the security of such 2[specified securities], he shall be deemed to
have converted (otherwise than by transfer) such 2[specified securities] into money on the date on which
such loan or advance is taken.
Where the cost of the 2[specified securities] has been taken into account for the purposes of
clause
or clause
of sub-section
“cost”, in relation to any 2[specified securities], means the amount invested in such 2[specified
securities] out of the net consideration received or accruing as a result of the transfer of the original
asset;
“net consideration”, in relation to the transfer of a capital asset, means the full value of the
consideration received or accruing as a result of the transfer of the capital asset as reduced by the
expenditure incurred wholly and exclusively in connection with such transfer.]