Applicability and Eligibility
- This section is applicable to both individual and HUF.
- Transfer of asset must Long Term Capital Asset and it must be residential house property i.e a house or a plot of land.
New asset to Purchased or Constructed
- New Plant and machinery must be purchased within 1 year from date of subscription of equity shares of eligible company.
- Shares should be subscribed within due date of return filing.
- Amount of exemption applicable is
=Cost of new asset x Capital gain / Net consideration
Transfer of new asset
- If equity shares or new plant and machinery transferred within 5 years from date of subscription/ acquisition then exempt capital gain taxable in the previous year of transfer of equity shares or new plant and machinery in hands of assessee.
- In case of computer and computer software acquired by eligible company start up then the period is restricted to 3 years only.
Important Terms in 54GB
Eligible Company Means
- Company incorporated in India during the period from 1st April of previous year relevant to assessment year in which the capital gain arise to the due date of furnishing the return of income under section 139(1) by assessee.
- It must be engaged in eligible business.
- Company in which is the assessee has more than 25% share capital or voting rights after the subscription in shares.
- Company qualifies to be an Eligible Start up.
Eligible Business Means
- Eligible business means eligible start-up engaged in innovation, development, or improvement of product or process or service or scalable business model with a high potential of employment generation or wealth creation.
Eligible Start up Means
Company satisfied following condition
- Company incorporated between 01/04/2016 to 01/04/2022.
- Total turn over of its business does not exceed 100 crores in any of the previous year in which deduction u/s 80-IAC claimed.
- It holds certificate of eligible business from the inter ministerial board of certificate as notified by central govt.
New Asset Means
New asset means new plant and machinery but does not include
- Plant and machinery before its installation by assessee was used either within or outside India by any other person (Second Hand Plant & Machinery)
- Plant and machinery installed any office premises or any residential accommodation including guest hours.
- Any office appliances including computers or computer software.
- Any vehicle
- Plant and machinery the whole of the actual cost of which is allowed as 100% deduction under Profit or Gain under Business or Profession.
- In case of start up by technology driven start up, the new asset shall include computer or computer software.
