Tax Ready Reckoner

When non-residents (NRIs/Foreign Investors) transfer shares/debentures of Indian companies, special tax provisions apply under: Proviso to Section 48(Tax calculation method) Rule 115A(Tax rates and exemptions) 1. Key Tax Rules for Non-Residents (A) Tax Rates ASSET TYPE HOLDING PERIOD TAX RATE Listed Shares >12 months (LTCG) 10% (no indexation) Unlisted Shares >24 months (LTCG) 20% (with indexation) Debentures/Bonds Any period 10% (if […]

The Income Tax Act provides multiple exemptions to reduce or eliminate capital gains tax liability if the proceeds are reinvested in specified assets or meet certain conditions. Below is a categorized list of key exemptions: 1. Exemptions for Residential Property Reinvestment (A) Section 54 – Sale of Residential Property Eligibility: LTCG from sale of a residential house property. Exemption: Reinvest

Section 54 of the Income Tax Act, 1961 provides tax exemption on long-term capital gains (LTCG) arising from the sale of a residential house property, if the proceeds are reinvested in another residential property. 1. Eligibility Conditions ✅ Asset Sold: Must be a residential house property (not commercial/land). ✅ Holding Period: Property must be held for >24 months (LTCG applies). ✅ Reinvestment: Must purchase/construct another residential house in India.

Section 54B of the Income Tax Act, 1961, provides a tax exemption on capital gains arising from the transfer of agricultural land, provided the proceeds are reinvested in another agricultural property within a specified period. 1. Eligibility Conditions ✔ Applicable to: Individuals and HUFs (not companies, LLPs, or firms). ✔ Asset Type: Only agricultural land used for farming for at least 2 years before transfer.

Section 54D of the Income Tax Act, 1961, provides tax exemption on capital gains arising from the compulsory acquisition of land or buildings used for industrial purposes, if the proceeds are reinvested in new industrial assets. 1. Eligibility Conditions ✅ Asset Type: Land or building used for industrial/business purposes (factory, warehouse, etc.). ✅ Acquisition Type: Must be compulsorily acquired by the government (not voluntary sale). ✅ Holding Period:

Section 54EC of the Income Tax Act, 1961, provides tax exemption on long-term capital gains (LTCG) from the sale of land or building if the proceeds are invested in specified bonds (e.g., NHAI, REC, or other government-approved bonds). 1. Eligibility Conditions ✅ Asset Sold: Must be land, building, or both (not applicable to other assets like shares, gold, etc.). ✅ Holding Period: Must be held for >24 months (LTCG applies).

Section 54F of the Income Tax Act, 1961, provides tax exemption on long-term capital gains (LTCG) from the sale of any capital asset (except residential house property), if the proceeds are reinvested in one residential property. 1. Eligibility Conditions ✅ Asset Sold: Any long-term capital asset (e.g., land, shares, gold, commercial property) except a residential house. ✅ Holding Period: Must be held for >24 months (for immovable property) or >12

Section 54G of the Income Tax Act, 1961, provides tax exemption on capital gains arising from the transfer of plant, machinery, land, or building when an industrial undertaking is relocated from an urban area to a rural/non-urban area. 1. Eligibility Conditions ✅ Applicable to: Businesses relocating industrial units (manufacturing, processing, etc.). ✅ Asset Type: Land or building used for the industrial undertaking. Plant, machinery, or

Section 54GA of the Income Tax Act, 1961, provides tax exemption on capital gains when a business relocates its industrial undertaking from an urban area to a Special Economic Zone (SEZ). 1. Key Features ✅ Applicable to: Businesses shifting plant, machinery, land, or building from an urban area to an SEZ. ✅ Exemption: Full capital gains tax relief if proceeds are reinvested in: New land, building, plant,

Section 54GB of the Income Tax Act, 1961, provides tax exemption on long-term capital gains (LTCG) from the sale of a residential property, if the proceeds are reinvested in the equity shares of an eligible manufacturing SME (Small or Medium Enterprise). This provision aims to promote investment in India’s manufacturing sector while offering tax relief to individuals/HUFs 15. 1. Key Eligibility Conditions ✅ Applicable