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TMI BlogCapital gain Tax Relief in relocation of industrial undertakings from urban areas to SEZ area in Clause 88 of Income Tax Bill, 2025 vs. Section 54GA of Income Tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption of capital gains on the transfer of assets in cases where an industrial undertaking is shifted from an urban area to a Special Economic Zone (SEZ). This clause is crucial as it aims to encourage industrial relocations to SEZs, thereby fostering economic growth and development in these regions. The provision is comparable to Section 54GA of the Income Tax Act, 1961, which serves a similar purpose. This commentary will delve into the objectives, implications, and comparative analysis of these provisions. Objective and Purpose The primary objective of Clause 88 is to provide tax incentives for industrial undertakings shifting from urban areas to SEZs. By exempting capital gains from taxation, the government seeks to motivate busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset is less than the capital gains, the difference is taxable. If the cost is equal to or exceeds the capital gains, no tax is levied. 5. Deposit of Unutilized Gains:- Unutilized capital gains must be deposited in a specified account before filing the income tax return, ensuring compliance with government schemes. Section 54GA of the Income Tax Act, 1961 Section 54GA shares similarities with Clause 88 but has distinct features: 1. Scope and Application:- It applies to capital gains from transferring assets used for business purposes in an urban area when relocating to an SEZ. 2. Investment Period:- Similar to Clause 88, the investment period is one year before or three years after the asset transfer. 3. Utilization and Deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistent across both provisions. 3. Differences in Implementation:- Clause 88 may introduce updated regulatory frameworks or definitions, reflecting changes in economic policy or administrative practices since the enactment of Section 54GA. 4. Policy Evolution:- The transition from Section 54GA to Clause 88 may reflect an evolution in policy focus, adapting to contemporary economic challenges and opportunities. Conclusion Clause 88 of the Income Tax Bill, 2025, represents a strategic effort to leverage tax policy in fostering economic development within SEZs. Its alignment with Section 54GA of the Income Tax Act, 1961, underscores a continued commitment to incentivizing industrial relocations. As businesses navigate these provisions, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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