Section 54GB : Exemption on CG on transfer of residential property if invested in new manufacturing SME company - Income Tax - Ready Reckoner - Income Tax

Section 54GB : Exemption on CG on transfer of residential property if invested in new manufacturing SME company Assessee Individual/HUF Nature of Asset Long-term capital asset Asset to Transfer Transfer of a residential property (a house or a plot of land) owned by the assessee (House or plot of land may be in India or outside India) made on or before 31.03.2022 Conditions for claiming deductions The assessee has before the due date of furnishing the return of income under section 139(1) utilized the net consideration for subscription in EQUITY shares of an eligible company (Preference share cannot be subscribed), and the company has within 1 year from the date of subscription in equity shares, utilised the amount for purchase of new asset. The unutilised amount of net consideration shall be deposited by the company before the due date in such bank or institution as as may be specified by Central Govt. Meaning of Eligible Company Eligible company means a company which fulfills all the following conditions: It should be incorporated in India during the period commencing from 1st April of the previous year in which the capital gains arises and ending on the due date of furnishing of return u/s 139(1) by the assessee. It is engaged in business of manufacture of an article or thing or in an eligible business It is a company in which assessee has more than 25% share capital or more than 25% voting rights after subscription in shares by the assessee The company which qualifies to be a small or medium enterprise under the Micro, Small or medium Enterprise Act, 2006 or is an eligible start-up. Meaning of New Asset New asset means new plant and machinery but does not include- (i) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; (ii) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; (iii) any office appliances including computers or computer software; (iv) any vehicle; or (v) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head Profits and gains of business or profession of any previous year. In the case of an eligible start-up, being a technology driven start-up so certified by the Inter-Ministerial Board of Certification notified by the Central Government in the Official Gazette, the new asset shall include computers or computer software. Capital Gain Deposit Scheme Available Quantum of Deduction Where part of the net sales consideration is invested, it will be exempt proportionately :- Capital Gain x Amount Invested/Net Sale Consideration Transfer Consequence If the equity shares of the company or the new asset acquired by the company are sold or otherwise transferred within a period of 5 years from the date of their acquisition, the amount of capital gain arising from the transfer of the residential property not charged under section 45(1) as provided all be deemed to be the income of the assessee chargeable under the head Capital gains of the PY in which such equity shares or such new asset are sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of shares or of the new asset, in the hands of the assessee or the company, as the case may be