Capital gain exemption: Section 54GA

Asset to be transferred: Land & Building, Plant & machinery, any right in land and building used for the purpose of business of an industrial undertaking in urban area.

Usage of derived capital gain to claim exemption: Purchase/construction of Land & Building, Plant & machinery, expenditure on shifting of the old industrial undertaking or incurring any other expenditure as specified by the Government in special economic zone.

• All assessees.

• The capital asset transferred shall be either a short-term or long-term capital asset.
• The land & building, plant & machinery should be purchased 1 year before or 3 years from date of transfer.
• Such transfer should be on account of shifting of industrial undertaking from urban area to special economic zone.

• Amount invested in land and building and/or plant and machinery (or) capital gain (whichever is less).

• Unutilised capital gain can be claimed as exemption by depositing the same in the capital gain deposit A/c scheme with any nationalised bank before the due date of filing return of income.
• If the amount in the capital gain deposit A/c scheme remains unutilised for a period of 3 years (in case of purchase or construction of any land or building), the unutilised amount will be taxable as LTCG in the PY in which the 3 years expires.

• The newly acquired asset should not be transferred within a period of 3 years from the date of acquisition.
• If transferred, the cost of new asset shall be reduced by the amount of capital gain exempted earlier while calculating capital gain in the year of transfer.
• By reducing the capital gain from the cost of asset, the amount of capital gain exempted earlier is indirectly chargeable to tax in the year of sale of newly acquired land and building or plant and machinery.