Capital Gains on Buy-Back of Shares Introduction: Buy-back of shares is treated as a transfer, and income from it is taxable under “Capital Gains.” From 01-10-2024, consideration received by shareholders from a domestic company’s buy-back is deemed a dividendunder Section 2(22)(f). The consideration for capital gains computation is treated as nil, resulting in a capital loss… Read More »

Taxability of Streedhan and Eligibility for Section 54F & Housing Loan Deductions Facts The Assets: The assessee sold gold ornaments (approx. 1,000 grams) and silver utensils for ₹29.91 lakhs, claiming these were received as Streedhan during her marriage in 1992 and other family occasions. The Investment: The sale proceeds were invested in a residential house… Read More »

Capital Gains on Distribution of Assets by a Company in Liquidation No Capital Gains For Company When a company distributes its assets to its shareholders upon liquidation, such distribution shall not be regarded as a “transfer” by the company for the purposes of Section 45. [Section 46(1)] Capital Gains For Shareholders When a shareholder receives money or… Read More »

Computation of Capital Gains in Case of Depreciable Assets Introduction Section 50 deals with how capital gains are computed when a depreciable asset is transferred. Regardless of the period of holding, any gain on the transfer of depreciable assets is always treated as short-term capital gain. When Part of a Block is Sold If one or… Read More »

Reference to Valuation Officer Introduction An Assessing Officer (AO) may refer a capital asset’s valuation to a Valuation Officer to ascertain its fair market value (FMV). This referral is warranted when the declared value appears lower than the actual FMV or the asset’s nature necessitates expert evaluation. Key Provisions Purpose of Reference: To determine the… Read More »

Indexed Cost of Acquisition and Cost of Improvement for Computation of Capital Gains Introduction Indexation adjusts the cost of acquisition and cost of improvement of a capital asset to neutralise inflation’s impact, ensuring tax on actual gains. The Cost Inflation Index (CII) is used for this purpose. Indexation is no longer available for assets transferred… Read More »

Cost of Acquisition and Cost of Improvement for Computation of Capital Gains   Introduction The cost of acquisition includes the purchase price and expenses incurred to acquire a capital asset. Special provisions apply to determine the cost in certain scenarios. How to Calculate the Cost of Acquisition In General The cost of acquisition of an… Read More »

Period of Holding of a Capital Asset Introduction The period of holding is the duration for which a capital asset is held by the owner before its transfer. It determines whether the asset is classified as a short-term or long-term capital asset, which impacts the applicable tax rate. General Rule The period of holding is… Read More »