Table of Contents
1. What is section 54GA of Income-tax Act?
Section 54GA of Income-tax Act provides exemption of capital gains on transfer of assets of industrial undertaking from urban area to special economic zone.
2. Can I claim exemption under section 54GA in respect of short term capital gain?
Yes, exemption under section 54G can be claimed on both short term and long term capital gain.
3. What asset should be transferred to claim exemption under this section?
To claim exemption under this section the asset transferred should be Land & Building, Plant & machinery, any right in land and building used for the purpose of business of an industrial undertaking in urban area.
4. When should I purchase a capital asset to claim exemption under section 54GA?
The land & building, plant & machinery should be purchased 1 year before or 3 years from date of transfer.
5. How should the capital gain from transfer be used to claim exemption under section 54GA?
The capital gain should be used
- To purchase/construct Land & Building or Plant & machinery,
- To cover for expenditure incurred to shift the old industrial undertaking
To cover for any other expenditure as maybe specified by the Government.
6. Who can claim exemption under section 54GA?
Exemption under section 54GA is available to all assesses.
7. What is the maximum amount of exemption under section 54GA?
Amount invested in land and building and/or plant and machinery (or) capital gain (whichever is less).
8. What is capital gain account scheme?
Unutilized capital gain can be claimed as exemption by depositing the same in the capital gain deposit A/c scheme with any nationalized bank before the due date of filing return of income.
9. What if the amount in capital gain account scheme is not utilized within the specified period?
If the amount in the capital gain deposit A/c scheme remains unutilized for a period of three years, the unutilized amount will be taxable as LTCG in the PY in which the 3 years expires.
10. What happens if the amount invested in capital gain account scheme is not utilised within the specified period?
The amount not so utilised shall be charged under section 45 in the PY in which the period of three years from the date of the transfer expires.
11. When will the exemption granted under section 54G be withdrawn?
- If the newly acquired asset is sold within 3 years from date of acquisition, the exemption will be withdrawn.
- If withdrawn, the cost of new asset shall be reduced by the amount of capital gain exempted earlier while calculating capital gain in the year of transfer.