Income Tax Act, 2025
Section 4: Ins. by Act 14 of 2010, s. 19 (w.e.f. 12011).
4. Ins. by Act 14 of 2010, s. 19 (w.e.f. 12011).
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1[48. Mode of computation.—The income chargeable under the head “Capital gains” shall be
computed, by deducting from the full value of the consideration received or accruing as a result of the
transfer of the capital asset the following amounts, namely:—
(i) expenditure incurred wholly and exclusively in connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any improvement thereto:
Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer
of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting
the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and
the full value of the consideration received or accruing as a result of the transfer of the capital asset into
the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the
capital gains so computed in such foreign currency shall be reconverted into Indian currency, so,
however, that the aforesaid manner of computation of capital gains shall be applicable in respect of
capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or
debentures of, an Indian company:
Provided further that where long-term capital gain arises from the transfer of a long-term capital
asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an
Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the
words “cost of acquisition” and “cost of any improvement”, the words “indexed cost of acquisition” and
“indexed cost of any improvement” had respectively been substituted:
2[Provided also that nothing contained in the first and second provisos shall apply to the capital gains
arising from the transfer of a long-term capital asset being an equity share in a company or a unit of an
equity oriented fund or a unit of a business trust referred to in section 112A:]
3[Provided also that nothing contained in the second proviso shall apply to the long-term capital gain
arising from the transfer of a long-term capital asset, being a bond or debenture other than—
(a) capital indexed bonds issued by the Government; or
(b) Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond
Scheme, 2015:
Provided also that in case of an assessee being a non-resident, any gains arising on account of
appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of
an Indian company 4[held] by him, shall be ignored for the purposes of computation of full value of
consideration under this section:]
5[Provided also that where shares, debentures or warrants referred to in the proviso to clause (iii) of
section 47 are transferred under a gift or an irrevocable trust, the market value on the date of such transfer
shall be deemed to be the full value of consideration received or accruing as a result of transfer for the
purposes of this section:]
6[Provided also that no deduction shall be allowed in computing the income chargeable under the
head “Capital gains” in respect of any sum paid on account of securities transaction tax under Chapter VII
of the Finance (No. 2) Act, 2004 (23 of 2004).]
expenditure incurred wholly and exclusively in connection with such transfer;
the cost of acquisition of the asset and the cost of any improvement thereto:
Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer
of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting
the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and
the full value of the consideration received or accruing as a result of the transfer of the capital asset into
the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the
capital gains so computed in such foreign currency shall be reconverted into Indian currency, so,
however, that the aforesaid manner of computation of capital gains shall be applicable in respect of
capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or
debentures of, an Indian company:
Provided further that where long-term capital gain arises from the transfer of a long-term capital
asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an
Indian company referred to in the first proviso, the provisions of clause
shall have effect as if for the
words “cost of acquisition” and “cost of any improvement”, the words “indexed cost of acquisition” and
“indexed cost of any improvement” had respectively been substituted:
2[Provided also that nothing contained in the first and second provisos shall apply to the capital gains
arising from the transfer of a long-term capital asset being an equity share in a company or a unit of an
equity oriented fund or a unit of a business trust referred to in section 112A:]
3[Provided also that nothing contained in the second proviso shall apply to the long-term capital gain
arising from the transfer of a long-term capital asset, being a bond or debenture other than—
capital indexed bonds issued by the Government; or
Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond
Scheme, 2015:
Provided also that in case of an assessee being a non-resident, any gains arising on account of
appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of
an Indian company 4[held] by him, shall be ignored for the purposes of computation of full value of
consideration under this section:]
5[Provided also that where shares, debentures or warrants referred to in the proviso to clause
of
section 47 are transferred under a gift or an irrevocable trust, the market value on the date of such transfer
shall be deemed to be the full value of consideration received or accruing as a result of transfer for the
purposes of this section:]
6[Provided also that no deduction shall be allowed in computing the income chargeable under the
head “Capital gains” in respect of any sum paid on account of securities transaction tax under Chapter VII
of the Finance (No. 2) Act, 2004 (23 of 2004).]