Capital Gain On Transfer Of Assets In Cases Of Shifting Of Industrial Undertaking From The Urban Area To Any Special Economic Zone – Sec. 54GA

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SECTION 54GA: CAPITAL GAIN ON TRANSFER OF ASSETS IN CASES OF SHIFTING OF INDUSTRIAL UNDERTAKING FROM THE URBAN AREA TO ANY SPECIAL ECONOMIC ZONE

NATURE Transfer of asset being plant, machinery, land & building by any assessee in cases of shifting of industrial undertaking from the urban areas to any special economic zone
TYPE OF CAPITAL GAIN Any capital gain – short-term or long-term
CONDITIONS
  • The transfer is effected in the course of shifting the undertaking from an urban area to any special economic zone
  • The capital gain is utilised 1 year before or 3 years after date of transfer for the specified purpose which includes:-
  1. Purchased new plant/ machinery and
  2. Acquired building or land
  3. Expenses on shifting the old undertaking and its establishment to the Special Economic Zone
  4. Incurred expenses on such other purposes as may be specified in scheme framed by Central Govt.
  • The new asset should not be transferred within a period of 3 years from the date of its acquisition.
AMOUNT OF EXEMPTION  If capital gain < amount invested = full amount

If capital gain > amount invested = difference is taxable

In other words capital gain shall be exempt to the extent it is spent for the specified purpose
IF AMOUNT NOT UTILIZED TILL FILING OF RETURN U/S 139(1) Deposit in Nationalized bank under the capital Gains Deposit A/c scheme.
IF DEPOSIT NOT UTILISED Unutilized amount taxable as LT or ST in the previous year in which three years from the date of transfer of original asset expires.
CONSEQUENCES OF TRANSFER BEFORE THREE YEARS The capital gain, which was exempt earlier, shall be deducted from the cost of acquisition of the new asset for computation of capital gain in respect of transfer of new asset.

 

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