A tax on profits in capital investments such as stocks and property is called a(n) ______ tax.

Chargeability

Meaning of Capital Asset [Sec 2(14)]

Type of Capital Assets

Short Term Capital Asset

Long Term Capital Asset

Period of Holding

Meaning of Transfer [Section 2(47)]

Transactions which are not regarded as transfer [Section 47]

Computation of capital Gain

 Full Value of Consideration

 Cost of Acquisition

 Cost to the Previous Owner [sec. 49(1)]

 Cost of Improvement [Sec. 55(1)(b)]

 Rates of tax on capital gains

Reference to valuation officer [Section 55A]

Deduction/ Exemption under Capital Gain

Capital Gain Account Scheme 1988

 1)  Date of purchase (through stock exchanges) of shares and Securities

 2)  Date of transfer (through stock exchanges) of shares and securities

 3)  Date of purchase/transfer of shares and securities (transaction taken place directly between parties and not through stock exchanges)

 4)  Date of purchase/sale of shares and securities purchased in several lots at different points of time but delivery taken subsequently and sold in parts

 5)  Transfer of a security by a depository (i.e., demat account)

 a)  Date of purchase by broker on behalf of investor.

 b)  Date of broker's note provided such transactions are followed up by delivery of shares and also the transfer deeds.

 c)  Date of contract of sale as declared by parties provided it is followed up by actual delivery of shares and the transfer deeds.

 d)  The FIFO method shall be adopted to reckon the period of the holding of the security, in cases where the dates of purchase and sale cannot be correlated through specific number of scrips.

 e)  The period of holding shall be determined on the basis of the first-in-first-out method.

Conversion of stock-in-trade into capital asset

The period of holding of such converted asset shall be reckoned from the date of conversion.

Section

Particulars

46(1)

Distribution of asset in kind by a company to its shareholders at the time of liquidation

47(i)

Distribution of capital asset on total or partial partition of HUF

47(iii)

Transfer of capital asset under a gift or will or an irrevocable trust

47(iv)

Transfer of capital asset by a company to its wholly owned subsidiary company

47(v)

Transfer of a capital asset by a wholly owned subsidiary company to its holding company

47(vi)

Transfer of capital assets in a scheme of amalgamation

47(via)

Transfer of shares in an Indian company held by a foreign company to another foreign company under a scheme of amalgamation of the two foreign companies

47(viaa)

Transfer of capital assets in a scheme of amalgamation of a banking company with a banking institution

47(vib)

Transfer of capital assets by the demerged company to the resulting company in a demerger

47(vic)

Transfer of shares held in an Indian company by a demerged foreign company to the resulting foreign company

47(vica)

Any transfer of a capital asset by the predecessor co-operative bank to the successor co-operative bank in a business reorganization.

47(vicb)

Any transfer of capital asset (being shares) held by a shareholder in the predecessor co-operative bank if the transfer is made in consideration of the allotment to him of any shares in the successor co-operative bank in a scheme of business reorganization

47(vid)

Transfer or issue of shares by the resulting company to the shareholders of the demerged company in a scheme of demerger

47(vii)

Allotment of shares in amalgamated company in lieu of shares held in amalgamating company

47(viia)

Transfer of capital assets (being foreign currency convertible bonds or GDR) by a non-resident to another non-resident

Any transfer of following capital assets by a non-resident on a recognised stock exchange located in any International Financial Services Centre:

 a)  Bond or GDR

 b)  Rupee Denominated Bond of an Indian Co.

 c)  Derivative

 d)  Such other Securities as may be prescribed.

47(viiac)

Any transfer of a capital asset by original fund to the resulting fund in a relocation.

47(viiad)

Transfer of capital asset (being share, unit, interest), by a shareholder or unit holder or interest holder, held by him, in original fund in consideration for share or unit or interest in the resultant fund in a relocation.

47(viiae)

Transfer of capital asset by India Infrastructure Finance Company to an institution established for financing the infrastructure and development.

47(viiaf)

Transfer of capital asset, under a plan approved by the Central Government, by a public sector company to another public sector company

47(viib)

Transfer of capital assets (being a Government security carrying periodic payment of interest) outside India through an intermediary dealing in settlement of securities by a non-resident to another non- resident

47(ix)

Transfer of a capital asset (being work of art, manuscript, painting, etc.) to Government, University, National museum, etc.

47(x)

Transfer by way of conversion of bonds or debentures into shares

47(xa)

Transfer by way of conversion of bonds [as referred to in section 115AC(1)(a)] into shares or debentures of any company

47(xi)

Transfer by way of exchange of a capital asset being membership of a recognized stock exchange for shares of a company

47(xii)

Transfer of land by a sick industrial company which is managed by its workers’ co-operative

47(xiii)

Transfer of a capital asset by a firm to a company in the case of conversion of firm into company

47(xiiia)

Transfer of a capital asset being a membership right held by a member of a recognized stock exchange in India

47(xiiib)

Transfer of a capital asset by a private company or unlisted public company to an LLP, or any transfer of shares held in the company by a shareholder, in the case of conversion of company into LLP

47(xiv)

Transfer of a capital asset to a company in the case of conversion of proprietary concern into a company

47(xv)

Transfer involved in a scheme of lending of securities

47(xvi)

Transfer of a capital asset in a transaction of reverse mortgage made under a scheme notified by the Government

47(xvii)

Transfer of a capital asset (being share of a special purpose vehicle) to a business trust in exchange of units allotted by that trust to the transferor

Short-term capital assets

[Section 48]

Long-term capital assets

[Section 48]

Depreciable asset

[Section 50]*

Full value of consideration

Less: Cost of acquisition of asset

Less: Cost of improvement

Less: Expenditure incurred wholly and exclusively in connection with such transfer

Full value of consideration

Less: Indexed Cost of acquisition (See Note 1)

Less: Indexed Cost of Improvement (See Note 1)

Less: Expenditure incurred wholly and exclusively in connection with such transfer

WDV of block of asset at the beginning of previous year

Add: Actual cost of assets falling within that block acquired during the year

Less: Full value of consideration of assets transferred during the year

Less: Expenditure incurred wholly and exclusively in connection with such transfer

Section

Capital Asset

Transferor

Fourth proviso to section 48

Bonds or debentures.

Note: However, indexation benefit is available on two type of bonds, namely,-

  •  Capital indexed bonds (issued by the Government)

  •  Sovereign Gold Bond (issued by the RBI under the Sovereign Gold Bond Scheme, 2015)

Any person

112

Capital gains arising from transfer of unlisted shares (which is taxable at concessional rate of 10%) as calculated without giving effect to first proviso to Section 48

Non-resident

For Heavy Goods Vehicle:

Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by assessee.

For Other Goods Vehicle:

Rs. 7,500 for every month or part of a month during which the goods carriage is owned by assessee.

50A

Depreciable asset (other than an asset used by a power generating unit eligible for depreciation on straight line basis)

Any person

50B

Undertaking/division transferred by way of slump sale as covered by section 50B

Any person

115AB

Units purchased in foreign currency as given in section 115AB

Offshore fund

115AC

Global depository receipts (GDR) purchased in foreign currency as given in section 115AC

Non-resident

115ACA

Global depository receipts (GDR) purchased in foreign currency as given in section 115ACA

Resident individual - employee

115AD

Securities as given in section 115AD

Foreign Institutional

Investors

S. No.

Nature of transaction

Section

Full Value of Consideration

1.

Money or other asset received under any insurance from an insurer due to damage or destruction of a capital asset

45(1A)

Value of money or the FMV of the asset (on the date of receipt)

2.

Conversion of capital asset into stock-in-trade

45(2)

FMV of the capital asset on the date of conversion

3.

Transfer of capital asset by a partner or member to firm or AOP/BOI, as the case may be, as his capital contribution

45(3)

Amount recorded in the books of accounts of the firm or AOP/BOI as the value of the capital asset received as capital contribution

4.

Distribution of capital asset by Firm or AOP/BOI to its partners or members, as the case may be, on its dissolution

45(4)

FMV of such asset on the date of transfer

5.

Money or other assets received by share- holders at the time of liquidation of the company

46(2)

Total money plus FMV of assets received on the date of distribution less amount assessed as deemed dividend under section 2(22)(c)

6.

Buy-back of shares and other specified securities by a company

46A

Consideration paid by company on buyback of shares or other securities would be deemed as full value of consideration. The difference between the cost of acquisition and buy-back price (full value of consideration) would be taxed as capital gain in the hands of the shareholder.

However, in case of buy-back of shares by a domestic company (whether listed* or unlisted), the company shall be liable to pay additional tax at the rate of 20% under section 115QA on the distributed income (i.e., buy-back price as reduced by the amount received by the company for issue of such shares). Consequently, capital gain arising in hands of shareholder shall be exempt by virtue of section 10(34A) in such cases.
*With effect from 05/07/2019, section 115QA has been amended to levy additional tax on buy back of shares by listed companies as well. Consequently, section 10(34A) has also been amended to exempt income arising in hands of shareholder on account of buy back of shares by listed companies. x

7.

Shares, debentures, warrants (‘securities’) allotted by an employer to an employee under notified Employees Stock Option Scheme and such securities are gifted by the concerned employee to any person

Fourth Proviso to Section 48

Fair Market value of securities at the time of gift

8.

In case of transfer of land or building, if sale consideration declared in the conveyance deed is less than the stamp duty value

50C

The value adopted or assessed or assessable by the Stamp Valuation Authority shall be deemed to be the full value of consideration. However, no such adjustment is required to be made if value adopted for stamp duty purposes does not exceed 110% of the sale consideration.

Note: Where the date of agreement (fixing the amount of consideration) and the date of registration for the transfer of property are not the same, the value adopted or assessed or assessable by Stamp Valuation Authority on the date of agreement may be taken as full value of consideration.

9.

If consideration received or accruing as a result of transfer of a capital asset is not ascertainable or cannot be determined

50D

FMV of asset on the date of transfer

S. No.

Particulars

Notional Cost of Acquisition

1.

Additional compensation in the case of compulsory acquisition of capital assets

Nil

2.

Assets received by a shareholder on liquidation of the company

FMV of such asset on the date of distribution of assets to the shareholders

3.

Stock or shares becomes property of taxpayer on consolidation, conversion, etc.

Cost of acquisition of such stock or shares from which such asset is derived

4.

Allotment of shares in an amalgamated Indian co. to the shareholders of amalgamating co. in a scheme of amalgamation

Cost of acquisition of shares in the amalgamating co.

5.

Conversion of debentures into shares

That part of the cost of debentures in relation to which such asset is acquired by the assessee

6.

Allotment of shares/securities by a co. to its employees under ESOP Scheme approved by the Central Government

a) If shares are allotted during 1999-2000 or on or after April 1, 2009, FMV of securities on the date of exercise of option

b) If shares are allotted before April 1, 2007 (not being during 1999-2000), the amount actually paid to acquire the securities

c) If shares are allotted on or after April 1, 2007 but before April 1, 2009, FMV of securities on the date of vesting of option (purchase price paid to the employer or FBT paid to employer shall not be considered)

Higher of :

 (i)  Cost of acquisition of such asset; and

 (ii)  Lower of:

 (A)  The fair market value of such asset; and

 (B)  The full value of consideration received or accruing as a result of transfer of such asset.

Note: For meaning of 'Fair market Value' refer Explanation to Section 55(2)(ac).

7.

Property covered by section 56(2)(vii) or (viia) or (x)

The value which has been considered for the purpose of Section 56(2)(vii) or (viia) or (x)

8.

Allotment of shares in Indian resulting company to the existing shareholders of the demerger company in a scheme of demerger

Cost of acquisition of shares in demerged company ? Net book value of assets transferred in demerger ? Net worth of the demerged company immediately before demerger

9.

Cost of acquisition of original shares in demerged company after demerger

Cost of acquisition of such shares minus amount calculated above in point 8.

10.

Cost of acquisition of assets acquired by successor LLP from predecessor private company or unlisted public company at the time of conversion of the company into LLP in compliance with conditions of Section 47(xiiib)

Cost of acquisition of the assets to the predecessor private company or unlisted public company

11.

Cost of acquisition of rights of a partner in a LLP which became the property of the taxpayer due to conversion of a private company or unlisted public company into the LLP

Cost of acquisition of the shares in the co. immediately before conversion

12.

Depreciable assets covered under Section 50

Opening WDV of block of assets on the first day of the previous year plus actual cost of assets acquired during the year which fall within the same block of assets

13.

Depreciable assets of a power generating unit as covered under Section 50A*

WDV of the asset minus terminal depreciation plus balancing charge

14.

Undertaking/division acquired by way of slump sale as covered under section 50B

Net worth of such undertaking

15.

New asset acquired for claiming exemptions under sections 54, 54B, 54D, 54G or 54GA if it is transferred within three years

Actual cost of acquisition minus exemption claimed under these sections

16.

Goodwill of business or trade mark or brand name associated with business or right to manufacture, produce or process any article or thing or right to carry on any business or profession, tenancy right, stage permits or loom hours

a) If these assets were acquired by gift, will, etc., under section 49(1) and the previous owner had purchased these assets: Cost of acquisition to the previous owner

b) If the owner has purchased these assets: Actual cost of acquisition

c) If these assets are self-generated: Nil

17.

Right shares

Amount actually paid by assessee

18.

Right to subscribe to shares (i.e., right entitlement)

Nil

19.

Bonus shares

a) If allotted to the assessee before April 1, 1981: Fair market value on that date

b) In any other case: Nil

20.

Allotment of equity shares and right to trade in stock exchange, allotted to members of stock exchange under a scheme of demutualization or corporatization of stock exchanges as approved by SEBI

a) Cost of acquisition of shares: Cost of acquisition of original membership of the stock exchange

b) Cost of acquisition of trading or clearing rights of the stock exchange: Nil

21.

Capital asset, being a unit of business trust, acquired in consideration of transfer as referred to in section 47(xvii)

Cost of acquisition of shares as referred to in section 47(xvii) [applicable from AY 2015-16]

24.

Any other capital asset:

 a)  If it became property of taxpayer before April 1, 2001 by gift, will, etc., in modes specified in section 49(1): Cost of acquisition to the previous owner or FMV as on April 1, 2001, whichever is higher

 b)  If it became property of taxpayer before April 1, 2001 : Cost of acquisition or FMV as on April 1, 2001, whichever is more

 c)  If it became property of taxpayer after April 1, 2001 by gift, will, etc., in modes specified in section 49(1): Cost of acquisition to the previous owner

 d)  If it became property of taxpayer after April 1, 2001 : Actual cost of acquisition

S. No.

Particular

Cost of Improvement

1.

In relation to goodwill of a business, right to manufacture, produce any article or thing or right to carry on business or profession

Nil

2.

In relation to capital asset which becomes property of the assessee or previous owner before 01-04-2001

Any expenditure of capital nature incurred on or after 01-04-2001

3.

In relation to capital asset which becomes property of the assessee or previous owner before 01-04-2001 by way of any mode specified under Section 49(1)

Any expenditure of capital nature incurred on or after 01-04-2001 by the assessee or the previous owner

4.

In relation to capital asset which becomes property of the assessee or previous owner on or after 01-04-2001

Any expenditure of capital nature incurred by the assessee or the previous owner

5.

In relation to capital asset which becomes property of the assessee or previous owner on or after 01-04-2001 by way of any mode specified under Section 49(1)

Any expenditure of capital nature incurred by the assessee or the previous owner

Particulars

Section 54

Section 54B

Section 54D

Section 54EC

Section 54F

Section 54G

Section 54GA

Section 54GB

Eligible taxpayers

Individual and HUF

Individual and HUF

Any person

Any person

Individual and HUF

Any person

Any person

Capital gains eligible for exemption

Long-term

Short-term or Long-term

Short-term or Long-term

Long-term

Long-term

Short-term or Long-term

Short-term or Long-term

Capital gains arising from transfer of

Residential House property

Agriculture land used by taxpayer or by his parents or HUF for agriculture purposes in last 2 years before its transfer

Compulsory acquisition of land or building forming part of industrial undertaking (which was used for industrial purposes for at least 2 years before its acquisition).

Any long-term capital asset being Land or Building or Both

Any long term asset (other than a residential house property) provided on date of transfer taxpayer does not own more than one residential house property (except the new house)

Land, building, plant or machinery, in order to shift industrial undertaking from urban area to rural area.

Land, building, plant or machinery, in order to shift industrial undertaking from urban area to SEZ.

Assets to be acquired for exemption

One residential house property

Two residential house property

Note:
w.e.f., Assessment Year 2020-21, as assessee can claim section 54 exemption by making investment in two residential house property. However, the assessee can acquire two houses only if the amount of long-term capital gain doesn't exceeds Rs. 2 crores. If the assessee exercises this option, he shall not be subsequently entitled to exercise the option for the same or any other assessment year, i.e., the assessee can exercise this option only once in a lifetime.

Agricultural land (may be in urban area or rural area)

Land or building for shifting or reestablishing said industrial undertaking

Bond of NHAI or REC, etc.

One residential house property

Land, building, plant or machinery, in order to shift industrial undertaking to rural area.

Land, building, plant or machinery, in order to shift industrial undertaking to SEZ.

Time limit for acquiring the new assets

Purchase: within 1 year before or 2 years after date of transfer

Construction: within 3 years after date of transfer

Within 2 years after date of transfer

Within 3 years from date of receipt of compensation

Within 6 months from date of transfer

Purchase: within 1 year before or within 2 years after date of transfer

Construction: within 3 years after date of transfer

within 1 year before or 3 years after date of transfer

Within 1 year before or within 3 years after date of transfer

Exemption Amount

Investment in new assets or capital gain, whichever is lower

Investment in agricultural land or capital gain, whichever is lower

Investment in new assets or capital gain, whichever is lower

Investment in new assets or capital gains, whichever is lower, however, subject to Rs. 50 lakhs.

Investment in new assets X capital gain/net consideration

Investment in new assets or capital gain, whichever is lower

Investment in new assets or capital gain, whichever is lower

Withdrawal of exemption

If new asset is transferred within 3 years of its acquisition

If new asset is transferred within 3 years of its acquisition

If new asset is transferred within 3 years of its acquisition

If new asset is transferred or it is converted into money or a loan is taken on its security

within 5 years of its acquisition

a) If new asset is transferred within 3 years of acquisition,

b) if another residential house is purchased within 2 years of transfer of original asset;

c) if another house is constructed within

3 years of transfer of original asset

If new asset is transferred within 3 years of acquisition

If new asset is transferred within 3 years of acquisition

Deposit in Capital gains deposit scheme before due date under Section 139(1)

Yes

Yes

Yes

No

Yes

Yes

Yes

Yes