Schedule DCG – Deemed Capital Gains on sale of depreciable assets AY 2026-27

Schedule DCG – Deemed Capital Gains on sale of depreciable assets AY 2026-27

Schedule DCG (Deemed Capital Gains) of the ITR forms deals specifically with the computation of deemed capital gains arising from the sale of depreciable assets under section 50 of the Income-tax Act.

This schedule reports gains on the sale of assets that fall under different depreciation blocks, such as plant and machinery, buildings, furniture and fittings, intangible assets, and ships. The schedule categorises these assets based on the depreciation rates applicable, for example, 15%, 30%, 40%, or 45% for plant and machinery, and 5% or 10% for buildings.

This schedule is not editable as the figures are auto-populated with the relevant schedules for Depreciation (DPM) and Depreciable Other Assets (DOA).

Section 50 of the Income-tax Act, 1961

Rule 8AC of the Income-tax Rules, 1962

Under the Income-tax Act, depreciable assets are part of a block of assets as defined in Section 2(11), and any capital gain on their transfer is governed by Section 50. A depreciable asset is always considered a short-term capital asset, regardless of the holding period. Capital gains arise only when (i) the block ceases to exist due to the transfer of all assets, or (ii) the written-down value (WDV) of the block becomes nil.

With effect from AY 2021-22, goodwill is no longer classified as a depreciable asset, and any adjustment to the block value related to goodwill is subject to Rule 8AC. This may lead to deemed short-term capital gains if the reduced value of goodwill exceeds the written down value (WDV) plus any additions.

Therefore, gains from the transfer of depreciable assets, including cases involving partial or full transfers of blocks, assets sold before use, or removal of goodwill from the block, are consistently regarded as short-term capital gains.

This schedule applies to ITR-3, ITR-5 and ITR-6