Income Tax Act, 2025
Section 2: Ins. by Act 28 of 2005, s. 27 and the Second Schedule (w.e.f. 102006).
2. Ins. by Act 28 of 2005, s. 27 and the Second Schedule (w.e.f. 102006).
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then, instead of the capital gain being charged to income-tax as income of the previous year in which the
transfer took place, it shall, subject to the provisions of sub-section (2), be dealt with in accordance with
the following provisions of this section, that is to say,—
(i) if the amount of the capital gain is greater than the cost and expenses incurred in relation to all
or any of the purposes mentioned in clauses (a) to (d) (such cost and expenses being hereafter in this
section referred to as the new asset), the difference between the amount of the capital gain and the
cost of the new asset shall be charged under section 45 as the income of the previous year; and for the
purpose of computing in respect of the new asset any capital gain arising from its transfer within a
period of three years of its being purchased, acquired, constructed or transferred, as the case may be,
the cost shall be Nil; or
(ii) if the amount of the capital gain is equal to, or less than, the cost of the new asset, the capital
gain shall not be charged under section 45, and for the purpose of computing in respect of the new
asset any capital gain arising from its transfer within a period of three years of its being purchased,
acquired, constructed or transferred, as the case may be, the cost shall be reduced by the amount of
the capital gain.
Explanation.—In this sub-section,—
(a) “Special Economic Zone” shall have the meaning assigned to it in clause (za) of the
Special Economic Zones Act, 2005;
(b) “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.
(2) The amount of capital gain which is not appropriated by the assessee towards the cost and
expenses incurred in relation to all or any of the purposes mentioned in clauses (a) to (d) of
sub-section (1) within one year before the date on which the transfer of the original asset took place, or
which is not utilised by him for all or any of the purposes aforesaid before the date of furnishing the
return of income under section 139, shall be deposited by him before furnishing such return [such deposit
being made in any case not later than the due date applicable in the case of the assessee for furnishing the
return of income under sub-section (1) of section 139] in an account in any such bank or institution as
may be specified in, and utilised in accordance with, any scheme which the Central Government may, by
notification, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for
the purposes of sub-section (1), the amount, if any, already utilised by the assessee for all or any of the
aforesaid purposes together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for all or
any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within the period specified in that
sub-section, then,—
(i) the amount not so utilised shall be charged under section 45 as the income of the previous year
in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme
aforesaid.]
296
1[54GB. Capital gain on transfer of residential property not to be charged in certain
cases.—(1) Where,—
(i) the capital gain arises from the transfer of a long-term capital asset, being a residential
property (a house or a plot of land), owned by the eligible assessee (herein referred to as the
assessee); and
(ii) the assessee, before the due date of furnishing of return of income under sub-section (1)
of section 139, utilises the net consideration for subscription in the equity shares of an eligible
company (herein referred to as the company); and
(iii) the company has, within one year from the date of subscription in equity shares by the
assessee, utilised this amount for purchase of new asset,
then, instead of the capital gain being charged to income-tax as the income of the previous year in which
the transfer takes place, it shall be dealt with in accordance with the following provisions of this section,
that is to say,—
(a) if the amount of the net consideration is greater than the cost of the new asset, then, so much
of the capital gain as it bears to the whole of the capital gain the same proportion as the cost of the
new asset bears to the net consideration, shall not be charged under section 45 as the income of the
previous year; or
(b) if the amount of the net consideration is equal to or less than the cost of the new asset, the
capital gain shall not be charged under section 45 as the income of the previous year.
(2) The amount of the net consideration, which has been received by the company for issue of shares
to the assessee, to the extent it is not utilised by the company for the purchase of the new asset before the
due date of furnishing of the return of income by the assessee under section 139, shall be deposited by the
company, before the said due date in an account in any such bank or institution as may be specified and
shall be utilised in accordance with any scheme which the Central Government may, by notification in the
Official Gazette, frame in this behalf and the return furnished by the assessee shall be accompanied by
proof of such deposit having been made.
(3) For the purposes of sub-section (1), the amount, if any, already utilised by the company for the
purchase of the new asset together with the amount deposited under sub-section (2) shall be deemed to be
the cost of the new asset:
Provided that if the amount so deposited is not utilised, wholly or partly, for the purchase of the new
asset within the period specified in sub-section (1), then,—
(i) the amount by which—
(a) the amount of capital gain arising from the transfer of the residential property not charged
under section 45 on the basis of the cost of the new asset as provided in sub-section (1),
exceeds—
(b) the amount that would not have been so charged had the amount actually utilised for the
purchase of the new asset within the period specified in sub-section (1)been the cost of the new
asset,
shall be charged under section 45 as income of the assessee for the previous year in which the period
of one year from the date of the subscription in equity shares by the assessee expires; and
(ii) the company shall be entitled to withdraw such amount in accordance with the scheme.
if the amount of the capital gain is greater than the cost and expenses incurred in relation to all
or any of the purposes mentioned in clauses
to
(such cost and expenses being hereafter in this
section referred to as the new asset), the difference between the amount of the capital gain and the
cost of the new asset shall be charged under section 45 as the income of the previous year; and for the
purpose of computing in respect of the new asset any capital gain arising from its transfer within a
period of three years of its being purchased, acquired, constructed or transferred, as the case may be,
the cost shall be Nil; or
if the amount of the capital gain is equal to, or less than, the cost of the new asset, the capital
gain shall not be charged under section 45, and for the purpose of computing in respect of the new
asset any capital gain arising from its transfer within a period of three years of its being purchased,
acquired, constructed or transferred, as the case may be, the cost shall be reduced by the amount of
the capital gain.
Explanation.—In this sub-section,—
“Special Economic Zone” shall have the meaning assigned to it in clause
of the
Special Economic Zones Act, 2005;
“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.
The amount of capital gain which is not appropriated by the assessee towards the cost and
expenses incurred in relation to all or any of the purposes mentioned in clauses
to
of
sub-section
within one year before the date on which the transfer of the original asset took place, or
which is not utilised by him for all or any of the purposes aforesaid before the date of furnishing the
return of income under section 139, shall be deposited by him before furnishing such return [such deposit
being made in any case not later than the due date applicable in the case of the assessee for furnishing the
return of income under sub-section
of section 139] in an account in any such bank or institution as
may be specified in, and utilised in accordance with, any scheme which the Central Government may, by
notification, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for
the purposes of sub-section
to
of sub-section
within the period specified in that
sub-section, then,—
the amount not so utilised shall be charged under section 45 as the income of the previous year
in which the period of three years from the date of the transfer of the original asset expires; and
the assessee shall be entitled to withdraw such amount in accordance with the scheme
aforesaid.]
296
1[54GB. Capital gain on transfer of residential property not to be charged in certain
cases.—
Where,—
the capital gain arises from the transfer of a long-term capital asset, being a residential
property (a house or a plot of land), owned by the eligible assessee (herein referred to as the
assessee); and
the assessee, before the due date of furnishing of return of income under sub-section
of section 139, utilises the net consideration for subscription in the equity shares of an eligible
company (herein referred to as the company); and
the company has, within one year from the date of subscription in equity shares by the
assessee, utilised this amount for purchase of new asset,
then, instead of the capital gain being charged to income-tax as the income of the previous year in which
the transfer takes place, it shall be dealt with in accordance with the following provisions of this section,
that is to say,—
if the amount of the net consideration is greater than the cost of the new asset, then, so much
of the capital gain as it bears to the whole of the capital gain the same proportion as the cost of the
new asset bears to the net consideration, shall not be charged under section 45 as the income of the
previous year; or
if the amount of the net consideration is equal to or less than the cost of the new asset, the
capital gain shall not be charged under section 45 as the income of the previous year.
The amount of the net consideration, which has been received by the company for issue of shares
to the assessee, to the extent it is not utilised by the company for the purchase of the new asset before the
due date of furnishing of the return of income by the assessee under section 139, shall be deposited by the
company, before the said due date in an account in any such bank or institution as may be specified and
shall be utilised in accordance with any scheme which the Central Government may, by notification in the
Official Gazette, frame in this behalf and the return furnished by the assessee shall be accompanied by
proof of such deposit having been made.
For the purposes of sub-section
shall be deemed to be
the cost of the new asset:
Provided that if the amount so deposited is not utilised, wholly or partly, for the purchase of the new
asset within the period specified in sub-section
the amount by which—
the amount of capital gain arising from the transfer of the residential property not charged
under section 45 on the basis of the cost of the new asset as provided in sub-section
the amount that would not have been so charged had the amount actually utilised for the
purchase of the new asset within the period specified in sub-section
the company shall be entitled to withdraw such amount in accordance with the scheme.