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7/27/2019 Sec 54 and 54B.pptx
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COMPARISON OF DTC,
2010 WITH IT ACT, 1961
CAPITAL GAINS
eMBA Finance Group
8
Ekta Jaisingh 12025
Manan Bhayani 12053Pooja Mittal 12085
Vrajesh Thakker
12161
Zinal Vora 12164
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CAPITAL GAINS
Any profit or gains arising from the transfer of capital assetsis taxable under the head capital gains in the previous year inwhich the transfer has taken place.
Conditions
There should be a capital asset.
The capital asset should be transferred by the assessee.
Such transfer should take place during the previous year.
The profits or gains should arise as a result of this transfer.
Such profit or gain should not be exempted from tax undersections 54, 54B, 54D, 54EC, 54F and 54G & 54GA.
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SECTION 54Profit on sale of property used
for residence.
IT ACT, 1961
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In the case of an assessee being an individual or a Hindu
undivided family, the capital gain arises from the transfer of a long-
term capital asset being buildings or lands appurtenant thereto, and
being a residential house, the income of which is chargeable under
the head Income from house property.
The assessee has within a period of
one year before or
two years after the date on which the transfer took place purchased,
or has within a period of three years after that date constructed, a
residential house, 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 be dealt
with in accordance with the provisions of this section.
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(i) if the amount of the capital gain is greater than the cost of the
residential house so purchased or constructed, then
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; 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 purchase or construction, 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 ofthe new asset, then
the capital gain shall not be charged under section 45;
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
purchase or construction, as the case may be, the cost shall be
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The amount of the capital gain which is not appropriated by the
assessee
towards the purchase of the new asset made within one year before
the date on which the transfer of the original asset took place,
or which is not utilised by him for the purchase or construction of thenew asset before the date of furnishing the return of income under
section 139,
shall be deposited by him before furnishing such return in an
account in any such bank or institution as may be specified in, and
utilised in accordance with, any scheme which the CentralGovernment may, by notification in the Official Gazette, frame in this
behalf.
Such return shall be accompanied by proof of such deposit.
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For the purposes of sub-section (1), the amount, if any, already
utilised by the assessee for the purchase or construction of the new
asset 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 isnot utilised wholly or partly for the purchase or construction of the
new asset within the period specified in sub-section (1), 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.
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Section 54 B
Capital gain on transfer of land used foragricultural purposes not to be charged in
certain cases.
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From the transfer of a capital asset being land which,
In the two years immediately preceding the date on which the transfer took
place, was being used by the assessee or a parent of his for agricultural
purposes,
and the assessee has, within a period of two years after that date,
purchased any other land for being used for agricultural purposes, 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 be dealt with in
accordance with the following provisions of this section,
(i) if the amount of the capital gain is greater than the cost of the land sopurchased, 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;
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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 purchase, the cost shall be
nil; or
(ii) if the amount of the capital gain is equal to or less
than the cost ofthe 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 gainarising from its transfer within a period of three years of
its purchase, the cost shall be reduced, by the amount of
the capital gain.
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The amount of the capital gain which is not utilised by the assessee for thepurchase of the new asset before the date of furnishing the return of income
under section 139, shall be deposited by him before furnishing such 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 in the Official Gazette, frame in this behalf and such return shall
be accompanied by proof of such deposit; and, for the purposes ofsubsection (1), the amount, if any, already utilised by the assessee for the
purchase of the new asset 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 notutilised wholly or partly for the purchase of the new asset within the period
specified in sub-section (1), 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 two 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
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Long term capital gain
exemption
u/s 54 u/s 54B
a. Who can claim exemption Individual/HUF Individual
b. Eligible assets sold A residential
House property
(minimum holding
period 3 year)
Agriculture land
which has
been used by
assessee himself
or by his parents
for agriculture
purposes duringlast 2 yrs of
transfer
c. Assets to be acquired for
exemption
Residential house
property
Another agriculture
land
(urban or rural)
d. Time limit for acquiring the new
assets
Purchase :1 year
back or 2 years
forward,
Construction: 3years forward
2 yrs forward
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Long term capital gain
exemption
u/s 54 u/s 54B
e. Exemption Amount Investment in
the new assetsor capital gain,
which ever is
lower
Investment in
the agricultureland or capital
gain, which ever
is lower
f. Whether "Capital gain
deposit account scheme"
applicable
Yes Yes
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SECTION 54D: CAPITAL GAIN ON
COMPULSORY ACQUISITION OF LANDS AND
BUILDINGS NOT TO BE CHARGED IN CERTAIN
AREAS.Any Capital Gain arising to an individual out ofcompulsory acquisition of L&B under any law ofCapital Asset shall be exempt to an extent such capital
gain is invested in
1.Purchase of another residential property within 1year or 2 years after the due date of transfer of the
property sold and/or
2.Construction of residential house property within aperiod of 3 years from the date of transfer
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Provided that the new asset purchased orreconstructed is not transferred within a period of 3
years from the date of acquisition.
If the new asset is sold within a period of 3 yearsfrom the date of its acquistion then:
Cost of acquisition of this asset shall be reduced by
the amount of capital gain.
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QUANTUM OF DEDUCTION
Capital Gain will be charged in accordance with
the following provisions:
1.If the entire amount is equal to or less than thecost of new house, then the entire capital Gain
shall be exempt.
2.If the amount of capital gain is greater than the
cost of the house then the cost of the new house
shall be allowed as an exemption
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SCHEME
An alternative form of deposit given by the IT ACT.
Under the scheme
1.The amount of the capital gain must be
invested in the CGAC before the due date offurnishing the return.
2.Such a proof must be attached with the IT
return
3.If default, it will be treated as long term capitalgain in the 3rd year from the date of sale.
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SECTION 54E:CAPITAL GAIN ON
TRANSFER OF CAPITAL ASSETS NOT TO
BE CHARGED IN CERTAIN CASESWhole or part of net consideration is invested or deposited
by the assessee in specified assets within a period of sixmonths afterthe date of transfer(1st day of April 1992)
1.If the entire amount of net consideration is less than the
cost of new asset, then the entire capital Gain shall beexempt.
2.If the amount of net consideration is greater than the cost
of new asset then the cost of the new asset shall be allowedas an exemption
Providedoriginal asset transferred after 28th February 1983
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SPECIFIED ASSETS
a) Where original asset is transferred before 1stMarch 1979
b) Where original asset is transferred after 28th
February 1979
c) Where original asset is transferred after 28thFebruary 1983
d) Where the original asset is transferred after the
31st March 1986.
e) Where the original asset is transferred after 31stmarch 1989.
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RELIEF OF ROLLOVER OF
INVESTMENT ASSETAny Long term Capital Gain arising to an individualor HUF out of rollover of any original investment
asset shall be exempt based on computation by a
formula.
The deduction computed shall not exceed the
amount of capital gain arising from transfer of
investment asset.
Any amount withdrawn from the account under
CGDS shall be utilised within a period of one month
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FORMULA DETAILSDeduction was as follows:
A * B+C+DE
A=Amount if capital gains arising out fromtransfer of original investment asset
B=the amount invested for purchase orconstruction of new asset-1 year duration
C=the amount invested for purchase orconstruction of new asset-6 months
D-Amount invested in the capital gain depositscheme framed by government.
E-Net consideration
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IT ACT, 1961 DTC, 2010
It complies investment in capital assets It complies investment assets
The new asset shall not be transferred
within three years from the end of the
financial year in which the asset is
acquired
The new asset shall not be transferred
within one year from the end of the
financial year in which the asset is
acquired
Original asset usage must be 2 years Original asset usage must be atleast 1
year
Quantum of deduction method -2
conditions
Quantum of deduction based on a
formula.
DIFFERENCES BETWEEN PROVISIONS OF IT
ACT, 1961 AND DTC, 2010
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SEC 54 EA
Capital gain on transfer oflong-term capital assets not
to be charged in the caseof investment inspecified
securities
When the capital gain arises from the transfer of
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When the capital gain arises from the transfer of
long term capital asset, capital gain should be dealt
with in accordance of following provision
If the cost of the specified securities is not less than thenet consideration in respect of the original asset, thewhole of such capital gain shall not be charged under
section 45
If the cost of the specified securities is less than the netconsideration in respect of the original asset, so much ofthe capital gain as bears to the whole of the capital gain
the same proportion as the cost of acquisition of thespecified securities bears to the net consideration shallnot be charged under section 45.
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Where the specified securities are transferred
or converted into money
Securities are transferred or converted within the periodof three years from the date of acquisition.
The amount of capital gain arising from the transfer ofthe original asset not charged under section 45.
It shall be deemed to be income chargeable under thehead ofCapitalGain relating to long-term capital assets
of the previous year in which the specified securities are
transferred or converted into money
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Where the cost of the specified securities has been taken into
account a rebate with reference to such cost shall not be
allowed under section 88
For the purposes of this section
Cost, in relation to any specified securities, means the
amount invested in such 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.
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SEC -54EB
Capital gain on transfer of long-term capital assets not to be
charged in certain cases.
Where the capital gain arises from the transfer of a
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Where the capital gain arises from the transfer of a
long-term capital asset should be dealt with in
accordance of following provision
If the cost of the long-term specified asset is not less than the
capital gain arising from the transfer of the original asset, the
whole of such capital gain shall not be charged u/s 45
If the cost of the long-term specified asset is less than the
capital gain arising from the transfer 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
long-term specified asset bears to the whole of the capitalgain, shall not be charged under section 45.
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Where the long-term specified asset is transferred or
converted into money
Specified asset are transferred or converted within the
period of seven years from the date of acquisition.
The amount of capital gain arising from the transfer ofthe original asset not charged under section 45.
It shall be deemed to be income chargeable under the
head of Capital Gain relating to long-term capital assets
of the previous year in which the specified securities are
transferred or converted into money
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Where the cost of the long-term specified asset
has been taken into account
Where the cost of the long-term specified asset has
been taken into account, a deduction from the
amount of income-tax with reference to such cost
shall not be allowed under section 88.
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54EC:-CAPITAL GAIN NOT TO BE
CHARGED ON INVESTMENT IN
CERTAIN BONDS.Where the capital gain arises from the transfer of a long-
term capital 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 capital gains in the long-term specified asset.
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QUANTUM OF DEDUCTIONS:-
a) If the cost of the long-term specified asset is not less than the capital
gain arising from the transfer of the original asset, the wholeof such
capital gain shall not be charged under section 45 ;
b) If the cost of the long-term specified asset is less than the capital gain
arising from the transfer 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 long-term specified asset bears to the whole
of the capital gain, shall not be charged under section 45
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(2) Where the long-term specified asset is transferred or converted(otherwise than by transfer) into money at any time within a period of
three years from the date of its acquisition then :-
The amount of capital gains arising from the transfer of the originalasset not charged under section 45 on the basis of the cost of such
long term specified asset as provided in clause (a) or, as the case may
be, clause (b) of sub-section(1) shall be deemed to be the income
chargeable under the head Capital gains relating to long-term capital
asset of the previous year in which the long-term specified asset istransferred or converted (otherwise than by transfer)into money
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3) Where the cost of the long-term specified asset has been taken
into account for the purposes of clause (a) or clause (b) of sub-
section (1),
(a) a deduction from the amount of income-tax with reference to such
cost shall not be allowed under section 88 for any assessment
year ending before the 1st day of April, 2006
(b) a deduction from the income with reference to such cost shall not
be allowed under section 80C for any assessment year beginning
on or after the 1st day of April, 2006.
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Long-term capital asset for this sec 54EC
Making any investment on or after the 1st day of April, 2007
means any bond, redeemable after three years and issued on or
after the 1st day of April, 2007 by the National Highways Authority
of India constituted under section 3 of the National Highways
Authority of India Act, 1988(68 of 1988) or by the RuralElectrification Corporation Limited, a company formed and
registered under the Companies Act, 1956
TRANSFER OF CERTAIN CAPITAL
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TRANSFER OF CERTAIN CAPITAL
ASSETS NOT TO BE CHARGED IN CASE
OF
INVESTMENT IN RESIDENTIAL HOUSEAny Capital Gain arising to an individual or HUF
arising out of transfer of Long term capital asset shall be
exempt to an extent such capital gain is invested in
1.Purchase of another residential house within 1 year or
2 years after the due date of transfer of the property
sold and/or
2.Construction of residential house property within a
period of 3 years from the date of transfer
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CONDITIONSa) The assessee owns more than one residential house, other
than the new asset, on the date of transfer of the original
asset; or
purchases any residential house, other than the new asset,
within a period of one year after the date of transfer of the
original asset; orconstructs any residential house, other than the new asset,
within a period of three years after the date of transfer of the
original asset; and
b) the income from such residential house, other than the one
residential house owned on the date of transfer of the original
asset, is chargeable under the head Income from house
property.
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Quantum of Deduction
If the cost of the new asset 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 new asset is less than the net consideration inrespect 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 the
new asset bears to the net consideration, shall not be charged
under section 45.
TRANSFER OF ASSETS IN CASES OF SHIFTING OF
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TRANSFER OF ASSETS IN CASES OF SHIFTING OF
INDUSTRIAL
UNDERTAKING FROM URBAN AREA.
Any Capital Gain arising out of transfer of capital asset for the purpose of
the business of an industrial undertaking situated in an urban area shallbe exempt to an extent such capital gain is invested (within a period of 1
year or before 3)
a)purchased new machinery or plant for the purposes of business of theindustrial undertaking in the area to which the said undertaking is shifted ;
b) acquired building or land or constructed building for the purposes of his
business in the said area ;
c) shifted the original asset and transferred the establishment of such
undertaking to such area; andd) incurred expenses on such other purpose as may be specified in a
scheme framed by the Central Government for the purposes of this
section
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QUANTUM OF DEDUCTION
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), then 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 ;
For the purpose of computing in respect of the new asset any
capital gain arising from its transfer within a period of three yearsof its being purchased, acquired, constructed or transferred, as
the case may be, the cost shall be nil ; or
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If the amount of the capital gain is equal to,or less than, the cost of the new asset, then
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 fromits transfer within a period of three years of
its being purchased, acquired, constructed ortransferred, as the case may be, the costshall be reduced by the amount of the capitalgain.
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SEC 54 ED
Capital gain on transfer ofcertain listed securities or
unit not to be charged incertain cases.
Where the capital gain arises from the
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Where the capital gain arises from the
transfer of a long-term capital asset, being
listed securities or unit
If the cost of the specified equity shares is not lessthan the capital gain arising from the transfer of theoriginal asset, the whole of such capital gain shall notbe charged under section 45
If the cost of the specified equity shares is less thanthe capital gain arising from the transfer of the originalasset, so much of the capital gain as bears to the
whole of the capital gain the same proportion as thecost of the specified equity shares acquired bears tothe whole of the capital gain shall not be chargedunder section 45.
Explanation For the purposes of
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Explanation.For the purposes of
this sub-section,
Eligible issue of capital means an issue of
equity shares which satisfies the following
conditions, namely:
The issue is made by a public companyformed and registered in India;
The shares forming part of the issue are
offered for subscription to the public;
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Listed securities shall have the same
meaning.
Unit shall have the meaning assigned to it in
clause
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Where the specified equity shares are sold orotherwise transferred within a period of one yearfrom the date of their acquisition, the amount ofcapital gain arising from the transfer of the original
asset not charged under section 45 on the basisof the cost of such specified equity shares.
Shall be deemed to be the income chargeable
under the head Capital gains relating to long-term capital assets of the previous year in whichsuch equity shares are sold or otherwisetransferred.
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SEC 54 H
Extension of time for acquiring
new asset or depositing or
investing amount of
capital gain.
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Where the transfer of the original asset is by way ofcompulsory acquisition under any law .
The amount of compensation awarded for such acquisition isnot received by the assessee on the date of such transfer.
The period for acquiring the new asset by the assesseereferred to in those sections or, as the case may be, the periodavailable to the assessee under those sections for depositingor investing
The amount of capital gain in relation to such compensationas is not received on the date of the transfer, shall bereckoned from the date of receipt of such compensation.
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THANK YOU