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S.NO

CONDITION

1.     

Holding company holds 100% shareholding of subsidiary company.

2.     

Transferee company should be Indian Company.

NOTE: This exemption is not allowed if capital asset is transferred as stock in trade.

S.NO

EXPLANATION

1.     

Cost of Acquisition will be cost to previous owner (Section 49(1)).

2.     

Cost of Improvement done by previous owner & present owner shall be considered.

3.     

Period of Holding of previous owner shall also be considered

4.     

Indexed cost of Acquisition as per Manjula J. Shah (Bombay H.C.) will be:

(A*B)/C, where A, B & C means;

5.     

Benefit of Fair Market Value (FMV) as on 01/04/2001 is also available to present owner.

Transfer of any capital asset by Amalgamating company to Amalgamated company

If amalgamating company is an Indian Company (Section 47(vi)).

Transfer of shares in Indian company or shares of foreign company which derives its value from shares of Indian company by Amalgamating foreign company to Amalgamated foreign company

a)   If atleast 25% of shareholding of Amalgamating foreign company continue in Amalgamated foreign company.

b)   Such transfer does not attract tax in the country in which amalgamating company is incorporated (Section 47(via) & 47(viab).

Transfer under scheme of amalgamation of Banking company with Banking institution

As per section 45(7) of Banking Regulation, 1949 (Section 47(viaa))

Surrender of shares in Amalgamating company by shareholders of Amalgamating company to Amalgamated company

a)   Consideration will be only allotment of share in Amalgamated company except when amalgamated company is itself the shareholder.

b)   Amalgamated company is an Indian company.

Transfer of any capital asset by Demerged company to resulting company

If resulting company is an Indian company (Section 47(vib)).

Transfer of shares in Indian company or share of a foreign company which derives its value from share of Indian company by demerged foreign company to resulting foreign company

a) If shareholders holding atleast 75% of value of shares in demerged company continue in resulting company

b) such transfer does not attract tax in the country in which demerged company is incorporated (Section 47(vic) & 47(vid)).

Issue of shares by resulting company to shareholder of demerged company

Here shareholder received shares of resulting company is not treated as transfer of shares in demerged company (Section 47(vid)).

Bond/ GDR referred u/s 115AC outside India

By one non-resident to another non-resident, outside India (Section 47(viia)).

Rupee denominated bond of an Indian company

By one non-resident to another non-resident, outside India (Section 47(viiaa)).

Govt. securities carrying periodic payment of interest

By one non-resident to another non-resident outside India through an intermediary dealing in settlement of securities (Section 47(viib).

Bonds or GDR referred u/s 115AC or derivates or rupee denominated bond of Indian company or other notified securities

By non-resident on a Recognized Stock Exchange located in any IFSC & where the consideration is paid or payable in foreign currency (Section 47(viiab)).

Conversion of Sole Proprietor into company (Section 47(xiv))

      i.          All assets & liabilities transfer to company.

   ii.          Sole proprietor becomes shareholder.

 iii.          Consideration to sole proprietor shall only be allotment of shares in the company.

 iv.          His shareholding in company should be atleast 50% during 5 years from the date of conversion.

Conversion of Firm into company or conversion of Stock exchange as AOP/ BOI into recognized stock exchange as company (Section 47(xiii))

      i.          All assets & liabilities transfer to company.

   ii.          All Partners/ members becomes shareholder in proportion of their capital standing as on last date of succession.

 iii.          Consideration to partners/ members shall only be allotment of shares in the company.

 iv.          Total voting power of partners/ members in the company should be atleast 50% during 5 years from the date of succession.

    v.          The corporatization of Recognized Stock Exchange (RSE) in India is carried out as per Corporatization scheme approved by SEBI.

Transfer of membership rights for acquisition of shares & trading right in that RSE

Cost of Acquisition of equity shares allotted will be cost to acquire membership.

Cost of Acquisition of trading rights will be Nil.

Period of holding shall be reckoned from date of his membership in RSE.

Conversion of Unlisted Public Company/ Private Company into LLP (Section 47(xiiib))

      i.          All assets & liabilities transfer to LLP.

   ii.          All shareholders become Partners and their capital contribution & PSR are in proportion of their shareholding.

 iii.          Consideration to shareholder will only be share in profit & capital.

 iv.          Total PSR in LLP of shareholders should be atleast 50% during 5 years from the date of conversion.

    v.          No amount is paid directly/ indirectly to any partner from accumulated profit balance standing on conversion date for 3 years from date of conversion.

 vi.          Total T.O/ G.R. of company should be upto Rs. 60 lakhs in last 3 Financial years preceding the year of conversion.

vii.          Total assets of the company should be upto Rs. 5 crores in last 3 Financial years preceding the year of conversion.  

Conversion of Bond, debenture, debenture stock, deposit certificates of a company into shares or debentures of same company (Section 47(x))

Cost of Acquisition of shares/ debentures received on conversion will be cost of that part of bond, debenture, deposit certificate which is so converted.

Period of Holding of share/ debenture shall also include the period for which bond, debenture, deposit certificates held by the assessee.

Conversion of Preference share of a company into Equity share of same company (Section 47(xb))

Cost of Acquisition of equity share received on conversion will be cost of that part of preference share which is so converted.

Period of Holding of equity share shall also include the period for which preference shares held by the assessee.

Conversion of Gold into Electronic Gold Receipt (EGR) issued by a vault manager, or conversion of Electronic Gold Receipt into Gold (Section 47(viid)

Cost of Acquisition of current asset received on conversion will be cost of earlier asset which is so converted.

Period of Holding of earliest asset shall also include the period for which current asset held by the assessee.

Particular

Amount

Full value of consideration (FVOC)

xxx

Less: Expenses incurred in connection of Transfer

xxx

Net Consideration

xxx

Less: Cost of Acquisition (COA)

xxx

Less: Cost of Improvement (COI)

xxx

Capital Gain

xxx

S.NO

EXPLANATION

1.     

It is applicable to Non-resident assessee including Foreign Company;

2.     

Assets being share & debenture of Indian Company;

3.     

Such asset acquired in foreign currency by way of purchase or reinvestment;

4.     

Capital gain then be calculated in foreign currency & after that it shall be reconverted into Indian currency.

NOTES:

               i.          Assessee should be Non-resident in the year of sale.

            ii.          Index benefit not available where first proviso applies.

A

Cost of Acquisition.

B

Cost inflation index of the year of transfer.

C

Cost inflation index for the first year in which asset was held by assessee or for the year 01-02, whichever is later.

A

Cost of Improvement.

B

Cost inflation index of the year of transfer.

C

Cost inflation index for the year in which the improvement to the asset took place.

COST INFLATION INDEX (CII)

F.Y.

CII

F.Y.

CII

F.Y.

CII

2001-02

100

2009-10

148

2017-18

272

2002-03

105

2010-11

167

2018-19

280

2003-04

109

2011-12

184

2019-20

289

2004-05

113

2012-13

200

2020-21

301

2005-06

117

2013-14

220

2021-22

317

2006-07

122

2014-15

240

2022-23

331

2007-08

129

2015-16

254

2023-24

348

2008-09

137

2016-17

264

2024-25

363

TRANSFER OF SOVERIGN GOLD BONDS

Individual

If redeemed on maturity then, no Capital Gain will arise due to Section 47

If redeemed before maturity Capital Gain will arise with benefit of Indexation.

Others

Capital gain applicable on transfer on or before maturity and index benefit is also available.

S.NO

ASSETS

1.     

Goodwill or any other intangible asset of Business or Profession,

2.     

Trademark or Brand name associate with a Business or Profession,

3.     

Right to manufacture, produce, process any article or things (patent & copyright),

4.     

Right to carry on any Business or Profession,

5.     

Tenancy rights, Loom hours, Route permits or any other rights.

NOTES:

              i.          Benefit of Fair market value as on 01/04/2001 is not available in case of above assets.

            ii.          Capital gain on transfer of self-generated goodwill of a profession or self-generated trademark/ brand name associated with a profession, is not chargeable to tax upto A.Y 20-21.

         iii.          In case of Goodwill, in respect of which depreciation has been claimed upto P.Y 19-20, the cost of acquisition would be purchase price as reduced by depreciation claimed by the assessee.

Full value of consideration

xxx

Less: Cost of Acquisition

Nil

Short term capital gain

xxx

1.     

In case of goodwill or any other intangible asset of business, patent, copyright, right to carry on any business or profession or any other right – Always Nil.

2.     

In case of any other assets capital expenses incurred on improvement on or before 01/04/2001 is to be ignored and any improvement done after 01/04/2001 shall be taken into account.

S.NO

Capital Asset Means:

1.     

Property of any kind held by assessee, whether or not connected with business or profession.

2.     

Any Securities held by a Foreign Institutional Investor (FII),

But capital Asset does not include (excludes):

                                       i.          Stock in trade (RM/ WIP/ FG).

               ii.          Moveable personal asset (used by assessee or dependent family member for personal purpose). But excludes: Jewellery, Drawings, Paintings, Sculpture, Archaeological Collection, or Any other art of work.

                              iii.          Rural Agriculture land in India.

                       iv.          Gold Deposit Bonds, 1999 or Deposit certificates issued under the Gold Monetisation Scheme, 2015 (Interest on this instrument also exempt u/s 10(15)).

3.     

ULIP’s to which exemption u/s 10(10D) does not apply due to fourth and fifth proviso thereof.

NOTE NO.

EXPLANATION

1.     

Asset used for personal purpose of assessee: –

·      T.V, Car, Mobile etc. – Not a Capital Asset – Capital Gain not Applicable.

·      Jewellery, Drawings, Paintings – Capital Asset – Capital Gain is Applicable.

2.     

Gold Utensils, Silver Bars, Silver Coins were held not be considered as Personal Effect – Capital Gain Applicable (Maharaja Rana Hemanth Singh).

3.     

Silver Utensils held to be Personal Effect – No Capital Gain (Benarshilal Kataruka).

4.     

Car used in business is  to be treated as Capital Asset.

5.     

Jewellery means:

               i.          Ornaments made of gold, silver, platinum or other precious metal or alloy containing such metals.

              ii.          Precious stones whether or not set in any furniture, utensil or other article.

6.     

Rural area:

Rural area means which is not an urban area.

Urban area:

Urban area means:

                         i.          Any area (municipality, cantonment board etc.) which has a population of 10,000 or more.

             ii.          In the following area within the distance, measured aerially.

7.     

“Property” also includes any rights in relation to an Indian Company including right of management or control or any other right whatsoever.

S.NO

TRANSFER INCLUDES

1.     

The Sale, exchange, or relinquishment of the asset, or

2.     

The extinguishment of any right there in, or

3.     

Compulsory Acquisition there of under any law, or

4.     

Conversion of capital asset into stock in trade, or

5.     

Allowing the Possession of any immoveable property to be taken or retained in part performance of a contract.

6.     

Any transactions (like becoming a member of or acquiring shares in a Co. operative society) which has the effect of transferring or enabling the enjoyment of immoveable property.

7.     

The redemption of Zero-coupon bonds (ZCB).

NOTE:

“Transfer also includes disposing of or parting with an asset or interest therein or creating any interest in any asset in any manner whatsoever either directly or indirectly, absolutely or conditionally voluntarily or involuntarily by way of an agreement or otherwise.

Capital Asset

Period of Holding

Upto 22/07/2024

From 23/07/2024

Part: A

·      Security (other than unit*) listed in recognized stock exchange of India.

·      Unit of UTI

·      Unit of Equity oriented Mutual Fund

·      Zero Coupon Bonds

1 YEAR

1 YEAR

Part: B

·      Unlisted shares (shares not covered above)

·      Immoveable Property.

2 Years

2 years

Part: C

·      Any other Assets

3 Years

2 Years

* “other than unit” is omitted w.e.f. from 23^rd July 2024, so now in case of listed units Period of Holding 1 Year will be applicable from 23^rd July 2024. (E.g. Listed Business trust units).

If any asset held for more than 1/2/3 years, then it is treated as Long Term Capital Gain otherwise Short Term Capital Gain.

PRODUCT

TAX ON STCG

TAX ON LTCG

BEFORE

AFTER

BEFORE

AFTER

Listed equity shares.

(STT Paid)

15%

20%

10% on gains above Rs 1 Lakhs

12.5% on gains above Rs 1.25 Lakhs

Unlisted equity shares

Slab Rate

Slab rate

20% with indexation

12.5% without indexation

Listed Preference shares

Slab Rate

Slab rate

20% with indexation or 10% without indexation.

12.5% without indexation

Unlisted preference shares

Slab Rate

Slab rate

20% with indexation

12.5% without indexation

Equity Mutual Funds (stt paid)

15%

20%

10% on gains above Rs 1 Lakhs

12.5% on gains above Rs 1.25 Lakhs

Equity Mutual Funds ( if stt not paid)

Slab Rate

Slab rate

20% with indexation

12.5% without indexation

Sovereign Gold Bonds (listed)*

Slab Rate

Slab rate

20% with indexation or 10% without indexation.

12.5% without indexation

Any bonds listed

Slab Rate

Slab Rate

10% without indexation

12.5% without indexation

Specified Mutual Fund (debt)

Slab Rate

Slab Rate

20% with indexation

12.5% without indexation

Other Mutal Funds (gold funds, overseas funds)

Slab Rate

Slab Rate

20% with indexation

12.5% without indexation

S.NO

CONDITIONS

1.     

The deduction is available only to businesses which are newly set up in an SEZ. Existing businesses moving into an SEZ or expanding their operations are not eligible unless it involves setting up a completely new unit.

2.     

The entity must earn revenue from the export of goods or services. The tax benefits are computed precisely on the profits derived from such exports.

3.     

The unit shall not be formed by splitting up or by reconstruction of an existing business, unless prescribed under the Act. It shall not be formed by transferring used plant & machinery; however, if the value of used assets does not exceed 20% of the total plant & machinery used in the unit, the said conditions can be relaxed.

4.     

The incentives under this section are available to businesses who have taken necessary approval upto 31.03.2020 and begins manufacturing or production of articles or things or providing services upto 31.03.2021.

5.     

For claiming the deductions, businesses shall maintain proper documentation and file their return with details of export turnover, total turnover, and a report from Chartered Accountant certifying compliance with the conditions of Section 10AA.

6.     

Applicable to an undertaking which begins to manufacture or to produce article or things or computer software in any SEZ.

AMOUNT OF DEDUCTION

For First 5 Assessment Years

100% of export profits

For next 5 Assessment Years

50% of export profits

For next 5 Assessment Year

Amount debited to P&L a/c & credited to SEZ reinvestment allowance reserve a/c.

OR

50% of Export profits.

Whichever is lower.

NOTE NO.

EXPLANTAION

1.     

Export Profit:

(PGBP of unit located in SEZ * Export Turnover)/ Total Turnover.

2.     

Export Turnover:

Export turnover means the consideration in respect of exports brought into India in convertible foreign currency within 6 months from the end of P.Y or time permitted by the RBI.

3.     

Sales amount deemed to have been received in India if such amount is credited to a separate A/c maintained by assessee outside India with approval of RBI.

4.     

Amount credited to SEZ Re-investment allowance reserves A/c shall be utilized for acquiring new plant & machinery & put to use within 3 years from the end of P.Y. in which such reserved was created. If the amount is mis-utilized or un-utilized, then deduction claimed earlier shall be taxable as PGBP.

5.     

Deemed Income:

               i.          If reserves has been utilized for non-specified purpose: of the year in which wrongly utilized.

            ii.          If reserves has not been utilized till the expiry of time limit: of the year immediately following the period of 3 years.

6.     

Export turnover does not include freight, telecommunication charges, Insurance, or expenses for providing service outside India. Further export turnover shall not include cash compensatory support, Duty drawback and profit on sale of import entitlement license.

7.     

Total turnover shall not include freight, telecommunication charges, Insurance, or expenses for providing service outside India. Further it shall not include cash compensatory support, Duty drawback and profit on sale of import entitlement license. Total turnover includes export turnover and domestic turnover, and it further includes even that portion of export turnover which is not received in convertible foreign exchange.

8.     

Deduction u/s 10AA available after claiming deduction u/s VI-A from gross total income.

9.     

Assessee shall obtain a report from a CA and furnish it before the due date specified u/s 44AB.

10.                    

Deduction u/s 10AA not available if it is formed by splitting up/ reconstruction of existing business:

Exceptions: In case of software industry, development of technical manpower from existing units to SEZ unit shall not be treated as splitting up of business provided:

               i.          Technical manpower transferred to SEZ unit is upto 50% of the total manpower delayed in SEZ unit in the first year of business, or

            ii.          Net additions of technical manpower employed in all units atleast 50% or more of technical manpower in SEZ unit in such P.Y

11.                    

Plant & Machinery used should be new: –

Exception:

               i.          20% of the total value of Plant & Machinery used in the undertaking can be second hand.

            ii.          Plant & Machinery imported from outside India for the first time shall be treated as new Plant & Machinery.

S.NO

EXPLANATION

1.     

It is clarified that the software developed outside abroad at client place would be eligible for 10AA pursuant to a contact between client and SEZ unit.

2.     

It is further clarified that the profits earned as a result of deployment of technical manpower at client place abroad specifically for software development shall be eligible for 10AA pursuant to a contact between client and SEZ unit.

3.     

It is clarified that in case of change in ownership deduction shall be available during the unexpired period at applicable rates subject to fulfilment of prescribed conditions.

4.     

It has been clarified that the tax holiday should not be denied merely on ground of physical relocation of an eligible SEZ unit from one place to another SEZ unit.

S.NO

EXPLANATION

1.     

Any gift received by employee from employer due to employee – employer relationship it is always taxable (even if received on marriage) under income from salary.

2.     

Any gift/ benefit/ perquisite/ arising from Business or Profession is always taxable under the head PGBP.

S.NO

EXPLANATION

Money (without consideration):

If the aggregate amount received by any person during the P.Y exceeds Rs. 50,000 then the whole amount of gift is taxable.

.

Example: Mr. Karan receives cash gift of Rs. 20,000 each from his 3 friends on the occasion of his Birthday, is the money received taxable?

.

Since the total amount of cash gift received exceeds Rs. 50,000 (20,000*3 = 60,000), the entire amount i.e. Rs. 60,000 is taxable.

Moveable Property (without consideration):

If any moveable property received by any person without any consideration during the P.Y and the Fair Market Value (FMV) of such property exceeds Rs. 50,000 then the entire Fair Market Value shall be taxable.

.

Example: Mr. Mohan receives gold chain worth Rs. 80,000 from his girlfriend, is this gift taxable?

.

Yes, since the moveable property’s Fair Market Value exceeds Rs. 50,000, the entire amount i.e. Rs. 80,000 will be taxable in hands of Mr. Mohan.

Moveable Property (Inadequate consideration):

If any moveable property received by any person during the P.Y for inadequate consideration and the Fair Market Value (FMV) of such property less consideration paid exceeds Rs. 50,000 then the difference between Fair Market Value & consideration paid shall be taxable.

.

Example: Mr. Kunal received a painting worth Rs. 1.2 lakhs from his friend for Rs. 30,000 only, is the difference taxable?

.

Yes, since the FMV less consideration paid is greater than Rs. 50,000, the difference is taxable in hands of Mr. Kunal (Rs. 1,20,000 – Rs. 30,000 = 90,000).

Immoveable Property (without consideration):

If any immoveable property received by any person without any consideration during the P.Y and the Stamp Duty Value (SDV) of such property exceeds Rs. 50,000 then the entire Stamp Duty Value shall be taxable.

.

Example: Mr. Nayan receives Land worth Rs. 2,50,000 (SDV) from his girlfriend, is this gift taxable?

.

Yes, since the immoveable property’s Stamp Duty Value exceeds Rs. 50,000, the entire amount i.e. Rs. 2,50,000 will be taxable in hands of Mr. Nayan.

Immoveable Property (Inadequate consideration):

If any immoveable property received by any person during the P.Y for inadequate consideration and the Stamp Duty Value (SDV) of such property less consideration paid exceeds Rs. 50,000 plus Stamp Duty Value (SDV) is more than 110% of the consideration then the difference between Stamp Duty Value & consideration paid shall be taxable.

.

Example: Mr. Kunal received a Bungalow worth Rs. 1.2 crores (SDV) from his friend for Rs. 20 lakhs only, is the difference taxable?

.

Yes, Since the SDV of the more than 110% of the consideration paid (110% * 20 lakhs < 1.2 crores) & the difference between Stamp Duty Value and consideration paid is more than Rs. 50,000 the entire difference i.e. Rs. 1.2 crores – 20 lakhs = Rs. 1 crore is taxable in hands of Mr. Kunal.

S.NO

IMMOVEABLE PROPERTY MEANS:

Shares & Securities.

Jewellery.

Painting.

Archaeological collection.

Sculptures.

Bullion.

Drawing.

Virtual Digital Assets (VDA).

Any other work of art.

S.NO

MOVEABLE PROPERTY MEANS:

Land.

Buildings.

Land or building both.

Particulars

Rs.

Full value of consideration (Buy Back Price)

xxx

Less: Cost of acquisition/ indexed cost of acquisition

xxx

Short term capital gain/ Long term capital gain

xxx

S.NO

Case

Issue Price

Shares issued by a company on its subscription

Amount actually received by the company (including Premium)

E.g.

Tata ltd issued 10,000 shares on 10/07/2006 for Rs. 70 per share. Face value of the share was Rs. 10: In this case Issue Price will be Rs. 70.

Where prior to buy back, the company has returned any sum out of amount received.

Amount received by the company as reduced by the sum so returned.

If company paid DDT u/s 115-O on returned amount, then it shall not be reduced

E.g.

Suppose in above example company paid Rs. 5 on 15/08/2015 then the issue price will be Rs. 65 and if DDT was paid on those Rs. 5 then the issue price will be Rs. 70.

Shares issued under ESOP or as a part of sweat equity

whichever is lower.

.

E.g.

Kamal Ltd. issued 10,000 ESOPS at Rs. 40 per share (FV 10). FMV of shares is Rs. 70 per share. In this case issue price will be Rs. 70 lower of FMV or amount credited to share capital & premium account.

Shares are issued under a scheme of amalgamation, in lieu of share or share of an amalgamating company

Amount received by the amalgamating company in respect of such shares

E.g.

CCL ltd. issued 10,000 shares at Rs. 70 per share. CCL ltd amalgamated with DCL ltd and DCL ltd issued 20,000 shares to shareholders of CCL ltd.

In this case Issue Price will be = 7,00,000/20,000 = Rs. 35 per share

In case of Demerger, shares issued by resulting company

Amount received by demerged company in respect of original shares to be divided in ratio of net book value of the assets transferred in a demerger bears to the net worth of the demerged company immediately before such demerger.

In case of demerger, in hands of demerged company

Amount received shall be reduced by the amount determined in point 5 above.

E.g.

Burger ltd have 2 divisions Burger & Beverages. Burger Ltd. issued 10,000 shares at Rs. 70 per share in P.Y 01-02. Burger Ltd demerged and transfer beverage division to Beverages Ltd. in P.Y 19-20. At time of demerger net worth of Burger Ltd was Rs. 500 crores. Net assets transferred to Beverages Ltd. is Rs. 200 crores. Beverages ltd issued 20,000 shares of F.V Rs. 10 to shares of Burger Ltd.

.

Shares of Beverages Ltd.: Rs. (7,00,000*200cr/500cr)/20,000 = Rs. 140 per share.

Shares of Burger ltd.: (Rs. 7,00,000- Rs. 2,80,000)/ 10,000 = Rs. 42 per share.

Shares allotted or issued as a part of consideration for acquisition of any assets or settlement of liability

Amount received = A/B.

A: a) FMV of asset/ liab.

b) Amount credited to share capital & security premium account

Whichever is lower.

B: No. of shares issued as a part of consideration.

.

NOTE:

Where both shares and money is given the FMV of assets shall be considered only to the portion of consideration paid by shares.

E.g.

Karun Ltd. acquired assets in lieu of issue of 10,000 shares. FMV of assets is Rs. 5,00,000. In this case issue price will be Rs. 50.

Shares issued or allotted on succession or conversion of firm into a company or succession of sole proprietary concern by the company

Amoun received = (A-B)/C

A= Book value of assets in B/S as reduced by TDS, TCS, Adv. Tax (except refund) & unamortized amount of deferred expenditure.

.

B= Book value of liabilities in the B/S as reduced by capital, reserves and surpluses, provisions for unascertained liabilities and contingent liabilities

.

C= Number of shares issued on conversion.

Bonus shares issued without consideration

.

Nil

Shares issued on conversion of preference shares, bond or debentures, debenture stock or deposit certificate.

Amount received by the company in respect of the instrument so converted.

.

.

.

E.g.

KB ltd. issued 10,000 bonds for Rs. 1000 per bond in F.Y 14-15. On 18/04/23 bonds convertible into shares and company allotted 2,00,000 shares in lieu of bonds.

In this case Issue Price= 1crore/ 2 lakhs = Rs. 50.

Shares held in D-MAT Form, and which cannot be distinctly identified

Amount received for issue of shares on the basis FIFO method.

In any other case

Face value of the shares.

LIABILITES

ASSETS

Particulars

Rs.

Particulars

Rs.

Capital

25,30,000

Building

17,00,000

Provision for tax

(Excess by Rs. 20,000)

2,30,000

Goodwill

 10,00,000

Loan

4,70,000

Furniture

4,00,000

Other liab.

1,20,000

TDS/ TCS

2,00,000

Advance tax

50,000

TOTAL

33,50,000

TOTAL

33,50,000

A= Book value of assets

Building

17,00,000

Goodwill

10,00,000

Furniture

4,00,000

IT Refund (2,50,000- 2,10,000)

40,000

B= Book value of Liabilities

Loan

(4,70,000)

Other Liabilities

(1,20,000)

Net Assets

(25,50,000)

Particulars

Rs.

Full value of consideration (buy back price)

Always Nil

Less: Cost of acquisition of shares

(xxx)

STCL/ LTCL

(xxx)

Particulars

Rs.

Full value of consideration

Always Nil

Less: cost of acquisition (300 shares *50)

(15,000)

LTCL (it can be set off against any other ltcg of c/f for next 8 years)

(15,000)

Particulars

Rs.

Full value of consideration

1,40,000

Less: Cost of acquisitions (700 shares * 50 shares)

(35,000)

LTCG

1,05,000

LTCL B/F

(15,000)

LTCG

90,000

TYPE

DEFINITION

·      Indian Company

A Company formed and registered under the Companies Act, 2013 or any law of the state.

·      Domestic Company

Indian Company or any other company (foreign company) who made prescribed arrangement for the declaration and a payment of dividend within India. Thus, all Indian Co. are treated as domestic company, but all domestic company are not treated as Indian Company.

If a foreign company makes prescribed arrangements for payment of dividends in India, it shall be treated as Domestic Company.

·      Foreign Company

Company which is not a domestic company.

TYPE OF DIVIDEND

TAXABILITY

·      Final Dividend

It is Taxable in the year in which it is declared at the AGM by company

·      Deemed Dividend

It is Taxable in the year in which it is distributed/ paid by the company.

·      Interim Dividend

It is Taxable in the year in which it is received by shareholder.

S.NO

DEEMED DIVIDEND

1.     

Any distribution to its shareholders by the company of debentures, debentures stock or deposit certificates to the extent which company possesses accumulated profit whether capitalized or not and

2.     

Any distribution to its preference shareholders of shares by way of bonus to the extent which company possesses accumulated profit whether capitalized or not.

ALTERNATIVE INVESTMENT FUND

CATEGORY I

Investment in Start-ups, SME, social and economically viable projects.

Example:

Venture Capital Fund, SME Funds, Social Venture Funds, Infrastructure Funds, Angel Investment Funds.

CATEGORY II

Investment in Equity & Debt Securities

Example:

Private Equity, Funds, Debt Fund, Fund of Funds.

S.NO

EXPLANATION

1.     

All incomes of investment fund (except PGBP) are Exempt u/s 10(23FBA).

2.     

All income received by unit holders from investment fund are taxable in hands of unit holders (except PGBP) u/s 115UB.

3.     

Tax rates for investment fund (PGBP).

4.     

If the income accruing/ arising/ received by fund during the Previous Year and has not been paid/ credited to unit holders, then the same shall be deemed to have been credited to the account of Investor on the last day of P.Y. & taxable in hands of unit holder.

NOTE:

If income already taxed in the year of accrual, then it is not taxable in the year of receipt.

5.     

Any income accruing or received by a person being unit holder of an investment fund, out of investment made in the investment fund, shall be chargeable to income tax in the same manner as if it were the income accruing/ received by Unit Holder.

6.     

Income, nature & proportion will be same in the hands of Unit Holder.

7.     

Investment fund is compulsory required to file return u/s 139(4F).

ASSESSEE

TDS RATE

Non-Resident/ Foreign Company

Rate in force

Resident

10%.

Losses Head

Set-off

PGBP Losses

It can be carried forward and set off by Fund only.

Other Losses

It will be passed on to the Unit Holders (who hold the units for atleast for 12 months or more) to be carried forward and set-off in their individual hands.

S.NO

EXPLANATION

1.     

All incomes of Securitization Trust from the activity of Securitization are Exempt in hands of trust u/s 10(23DA).

2.     

Income accruing or received by investor from securitization trust (out of investment made in the trust), shall be taxable in the hands of Investors in the same manner & to the same extent as if investor had made investment directly in the underlying asset & not through the trust (Section 115TCA).

3.     

If the income accruing/ arising/ received by trust during the Previous Year and has not been paid/ credited to investors, then the same shall be deemed to have been credited to the account of Investor on the last day of P.Y. & taxable in hands of investors.

NOTE:

If income already taxed in the year of accrual, then it is not taxable in the year of receipt.

4.     

Income, nature & proportion will be same in the hands of Unit Holder.

5.     

Investment fund is compulsory required to file return u/s 139(4CEB).

6.     

Securitization Trust means a SPV or a trust set up by Reconstruction Company or Securtization Company under the regulation of SARFAESI Act, 2002 or SEBI (public offer & listing of Securitized Debt Instrument) Regulation 2008 or RBI direction/ Guidelines.

ASSESSEE

TDS RATE

Non-Resident/ Foreign Company

Rate in force

Resident Individual/ HUF

25%.

Other resident Payee

30%

S.NO

DESCRIPTION

A.   

If minor child’s income is clubbed in the hands of parent, then exemption u/s 10(32) of Rs. 1,500 p.a. per child is allowed for a maximum two children.

B.   

Once minor’s income is clubbed with one parent, it will continue to be clubbed with that parent only, in subsequent years. AO, may, club the minor’s income with other parent after giving an opportunity to be heard.

C.   

Where the marriage of the parents does not subsist, income of the minor will be includible in the income of that parent who maintains the minor child in the relevant P.Y.

D.   

Clubbing provisions are attracted even in respect of income of minor married daughter.

E.   

Child in relation to an Individual includes a stepchild and an adopted child of that individual.

S.NO

DESCRIPTION

A.   

The above provision is applicable only if relationship of husband & wife should exist at the time transfer of asset as well as at the time of generating the income.

B.   

This provision is not applicable if asset is transferred in connection with agreement to live apart.

C.   

If a house property is transferred by an individual to his spouse or minor child (not being a minor daughter) for without/ inadequate consideration, then such individual is treated as deemed owner as per Section 27 & Section 64 shall not apply.

S.NO

NOTES

1.     

Income includes loss also, so, if there is any loss then also clubbing provision are applicable.

2.     

Where an asset transferred into any other form, income derived from such converted asset shall also be clubbed.

3.     

Natural love & affection may be a good consideration but it’s not adequate consideration.

4.     

If the asset transferred is sold by the transferee the capital gain is also treated as income and shall also be clubbed.

5.     

If there are two transactions and they are inter-related and part of same transaction, it shall be considered to be a device for evasion of tax and therefore clubbing provision shall apply.

Example:

Mr. X gifted Rs. 12 lakhs to his brother’s wife (Mr’s Y) & his brother gifted Rs. 8 lakhs to Mrs. X (Mr. X’s wife). Gifted amount deposited in Banks @9% on 01/08/2024.

Clubbing provision will be applicable only to the extent of income on the matching amount of cross gifts, in above example Rs. 8 lakhs is matching amount proportionately Rs. 48,000 will be clubbed.

6.     

Where any asset is transferred by Individual to his spouse/ son’s wife & such amount is invested in business by the transferee the proportionate profit of such business will be clubbed as per the following formula:

Income from business * gifted by assessee/ Capial of     business on first day of P.Y

Clubbing provision shall be applicable only if gifted money is included in opening capital.

7.     

All the clubbing provisions are not applicable to second generation income i.e. income from accretion of transferred assets.

CONDITIONS TO BE SATISFIED BY AMALGAMATING CO.

S.NO

CONDITIONS

a)    

Amalgamating company should have been engaged in the business for 3 Years or more prior to the date of amalgamation.

Example: –

Amalgamation takes place on 01.07.2025, then Amalgamating company should have started the business on or before 01.07.2022.

b)   

The amalgamating company should hold at least 75% of the Book Value of Fixed Assets which it held two years prior to date of Amalgamation.

CONDITIONS TO BE SATISFIED BY AMALGAMTED CO.

S.NO

CONDITIONS

a)    

Amalgamated company should continue the business of amalgamating company for the period of at least 5 Years from the date of amalgamation.

b)   

Amalgamated Company should fulfil the prescribed conditions in case in case there is an Amalgamation of Industrial undertaking.

The prescribed condition is as follows: –

The Amalgamated company shall achieve the level of at least 50% of the installed capacity before the end of 4 Years from the date of amalgamation and continue to maintain such minimum level of production till the end of 5 Years from the date of Amalgamation. However, Central Government on an application made by the amalgamated company max relax the condition of achieving the level of production or period during which same is to be achieved or both in suitable cases.

c)    

Amalgamated Company holds continuously for a minimum period of 5 years from the date of Amalgamation at least 75% of Book Value of Fixed Assets of Amalgamating Company acquired in the scheme of Amalgamation.