Document created on 22 August 2016

Deductions Allowable from Capital Gains:

  • Expenditure incurred wholly and exclusively in connection with transfer of capital asset
    Section 48(i)

    Available to : All assessees

  • Cost of acquisition of capital asset and of any improvement thereto (indexed cost of acquisition and indexed cost of improvement, in case of long-term capital assets)
    Section 48(ii)

    Available to : All assessees

  • Investment of long-term capital gains, arising from sale of residential house* or land appurtenant thereto, in purchase/construction of one new residential house (Subject to certain conditions and limits).
    Section 54

    * One residential house in India with effect from assessment year 2015-16.

    Exemption : Amount invested in one new house or capital gain, whichever is lower.

    Available to : Individual and HUF

  • Investment of capital gains, arising from transfer of land used for agricultural purposes by an individual or his parents or a HUF, in other agricultural land (Subject to certain conditions and limits).
    Section 54B

    Exemption : Amount invested in agricultural land or capital gains, whichever is lower.

    Available to : Individual and HUF

  • Capital gains on compulsory acquisition of land or building forming part of an industrial undertaking invested in purchase/construction of other land/building for shifting/re-establishing said undertaking or setting up new industrial undertaking (subject to certain conditions and limits)
    Section 54D

    Available to : Any assessee

  • Net consideration on transfer of long-term capital asset made before 1-4-2000 invested in specified bonds, debentures, shares of a public comp-any or units of notified mutual funds (subject to certain conditions and limits)
    Section 54EA

    Available to : Any assessee
    Section 54EBLong-term capital gains on transfer of any long-term capital asset made be-fore 1-4-2000 invested in specified long-term assets (subject to certain conditions and limits)

    Available to : Any assessee

  • Long-term capital gains invested in long-term specified asset (bond redeemable after 3 years) (maximum investment in a financial year is Rs. 50 lakhs)* issued by National Highways Authority of India; or by the Rural Electrification Corporation Limited (subject to certain conditions and limits)
    Section 54EC

    * With effect from assessment year 2015-16 limit of Rs. 50 lakhs applies to total amount invested during financial year in which original asset is transferred and in subsequent financial year.

    Available to : Any assessee

  • Long-term capital gains on transfer before 1-4-2006 of certain listed securities or units invested in equity shares forming part of an eligible issue of capital (subject to certain conditions and limits)
    Section 54ED

    Available to : Any assessee

  • Long-term capital gain invested in long-term specified assets being units of such fund as may be notified by Central Government to finance start-ups
    Section 54EE

    Available to : Any assessee

  • Investment of long-term capital gains, arising from transfer of any long term asset other than a residential house property, in one new residential house property, provided that on the date of transfer the assessee should not own more than one residential house property (Subject to certain conditions and limits).
    Section 54F

    Exemption : Amount invested in one new asset X capital gains/ Net Consideration

    Available to : Individual and HUF

  • Capital gain on transfer of machinery, plant, land or building used for the purposes of the business of an industrial undertaking situate in an urban area (transfer being effected for shifting the undertaking to a non-urban area) invested in new machinery, plant, building or land, in the said non-urban area, expenses on shifting, etc. (subject to certain conditions and limits)
    Section 54G

    Available to : Any assessee

  • Capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area to any Special Economic Zone (subject to certain conditions and limits)
    Section 54GA

    Available to : All assessees

  • Investment of long-term capital gains arising from transfer of long-term capital asset, being a residential property, for subscribing the equity shares of an eligible company and such company has, within one year from the date of subscription, utilized this amount for purchase of specified new asset (subject to certain conditions and limits).
    Section 54GB

    Note:
    1. W.e.f. April 1, 2017, eligible start-up is also included in definition of eligible company.
    2. Provisions of this section shall not apply to any transfer of residential property made after March 31, 2017. However, in case of an investment in eligible start-up, the residential property can be transferred up to March 31, 2019.

    Exemption : Amount invested in new asset by eligible Co. X Capital gains/Net Consideration

    Available to : Individual and HUF

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