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TMI BlogComputation of capital gains in case of depreciable assets.: Clause 74 of Income Tax Bill, 2025 vs. Section 50 of Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... g Section 50 of the Income-tax Act, 1961, which serves a similar purpose under the current legal framework. Understanding these provisions is crucial for taxpayers and legal professionals as it impacts the computation of taxable income and the applicable tax liabilities. Objective and Purpose Clause 74 aims to streamline and clarify the computation of capital gains arising from the transfer of depreciable assets. The legislative intent is to ensure that the methodology for calculating capital gains is consistent and reflects the true economic gain from such transfers. It considers the need for an updated approach given the changes in asset management and valuation practices over the years. Section 50 of the Income-tax Act, 1961, was desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 50 provides a framework for computing capital gains on depreciable assets, ensuring that the gains are treated as short-term, irrespective of the holding period. * Modification of Sections 48 and 49: Section 50 modifies these sections to cater to depreciable assets, ensuring that the capital gains computation reflects the economic reality of asset depreciation. * Sub-section (1): Similar to Clause 74, this sub-section details the computation method, treating excess consideration over specified costs as short-term capital gains. * Sub-section (2): Deals with the cessation of a block of assets, prescribing the computation of capital gains in such scenarios. * Proviso and Explanation: Recent amendments have introduced provisions dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn asset considerations, reflecting evolving business practices. Clause 74 may eventually incorporate similar updates as it gets implemented and tested in practice. Conclusion Clause 74 of the Income Tax Bill, 2025, represents a significant update to the computation of capital gains on depreciable assets, building on the framework established by Section 50 of the Income-tax Act, 1961. While both provisions aim to ensure fair and accurate tax treatment of such gains, Clause 74 introduces a refined approach that may offer clarity and consistency. As tax laws continue to evolve, stakeholders must stay informed and adapt to ensure compliance and optimize their tax positions. Full Text: Clause 74 Special provision for computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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