CS Executive · Tax Laws and Practice · Capital Gains
Under the Income-tax Act, 2025, an assessee earns capital gains on transfer of land used for an industrial undertaking in an urban area, in consequence of shifting the undertaking to a Special Economic Zone. The gain is Rs 50 lakh and the cost of new assets in the SEZ is Rs 35 lakh. What is the capital gain charged for the tax year of transfer?
Rs 15 lakh is charged. Where the cost of the new asset in the Special Economic Zone is less than the capital gain, only the shortfall is taxed. The shortfall is Rs 50 lakh minus Rs 35 lakh, which is Rs 15 lakh.
- ANil
- BRs 35 lakh
- CRs 15 lakhCorrect
- DRs 50 lakh
Explanation
Where the cost of the new asset is less than the capital gain, the difference is charged as income of the tax year. Here 50 - 35 = Rs 15 lakh. Nil would apply only if the new asset cost was equal to or more than the gain, and Rs 35 lakh wrongly charges the amount invested.
Did you get it right without looking?
One question tells you little. A timed set on Capital Gains shows your real accuracy, how long you take and where you lose marks.
More Capital Gains questions
- Which bond qualifies as a 'long-term specified asset' under Section 85 of the Income-tax Act, 2025?
- Mehta Traders transfers an undertaking by slump sale after owning it for 30 months. Under the Income-tax Act, 2025, how is the profit from t…
- Under section 83 of the Income-tax Act, 2025, an individual does not utilise the capital gain on agricultural land to buy new land before fi…
- In a slump sale of a division by Bharat Engineering Ltd, the books show the following assets: land and stock at book value Rs 40 lakh, depre…
- Under the Income-tax Act, 2025, Aarav Traders Ltd transfers an undertaking by way of slump sale after owning and holding it for 30 months im…
- Meera has long-term capital gains of Rs 40 lakh from transferring a building. Within six months she invests Rs 30 lakh in eligible REC bonds…