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CMA Intermediate · Direct and Indirect Taxation · Capital Gains

Under Section 85 of the Income-tax Act, 2025, capital gains are not charged where the gains arise from the transfer of which type of asset and are invested in a long-term specified asset?

The exemption applies to long-term capital gains arising from transfer of land or building, or both. The gains must be invested in a long-term specified asset, such as notified bonds, within six months. Other assets such as shares or gold do not qualify under this section.

  1. AAny long-term capital asset, including shares and gold
  2. BLand or building, or bothCorrect
  3. COnly a residential house property
  4. DAny short-term or long-term asset held by a company

Explanation

Section 85(1) applies where the assessee has long-term capital gains from the transfer of land or building, or both, and invests in a long-term specified asset within six months. Shares and gold are not covered, and the section is not limited to residential houses.

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