Income Tax Act

Official PDF pages 126–130

SOURCE PDF PAGE 126
( a )   “competent authority” means the authority empowered to approve the
building plan under any law;
( b )   “specified agreement” means a registered agreement in which a person
owning land or building, or both, agrees to allow another person to develop
a real estate project on such land or building, or both, in consideration
of a share, being land or building or both, in such project, whether with
or without payment of part of the consideration in cash.
(16) The provisions of sub-section (14) shall not apply, if the person transfers his
share in the project on or before the date of issue of the certificate of completion,
and then,—
( a )   the capital gains shall be deemed to be the income of the tax year of such
transfer; and
( b )   the provisions of this Act, other than sub-section (14), shall apply for the
purpose of determination of full value of consideration.
(17) Irrespective of anything contained in sub-section (1), the difference between
the repurchase price of the units referred to in section 80CCB(2) of the Income-tax
Act, 1961 (43 of 1961) and the capital value of such units shall be deemed to be the
capital gains arising to the assessee in the tax year in which—
( a )   such repurchase takes place; or
( b )   the plan referred to in that section is terminated.
(18) For the purposes of sub-section (17), “capital value of such units” means any
amount invested by the assessee in the units referred to in section 80CCB(2) of the
Income-tax Act, 1961 (43 of 1961).
Capital gains on distribution of assets by companies in liquidation.
68.   (1) Irrespective of anything contained in section 67, where the assets of a
company are distributed to its shareholders on its liquidation, such distribu -
tion shall not be regarded as a transfer by the company for the purposes of the said
section.
(2) If a shareholder, on the liquidation of a company, receives any money or other
assets from the company, then,—
( a )   such shareholder shall be chargeable to income-tax under the head
“Capital gains”, in respect of the money so received or the market value
of the other assets on the date of distribution, as reduced by the amount
assessed as dividend within the meaning of section 2( 40 )( c ); and
( b )   the sum so arrived at shall be deemed to be the full value of the consid -
eration for the purposes of section 72.
Capital gains on purchase by company of its own shares or other specified
securities.
69.   (1) If a shareholder or a holder of other specified securities receives any
consideration from any company for the purchase of its own shares or other
specified securities held by such shareholder or holder of other specified securi -
ties, then, subject to the provisions of section 72, the difference between the cost

──────────

SOURCE PDF PAGE 127
of acquisition and the value of consideration so received shall be deemed to be the
“Capital gains” arising to such shareholder or the holder of other specified securities,
as the case may be, in the year in which the company purchases the shares or other
specified securities.
10
[ (2) In respect of capital gains referred to in sub-section (1), where a company pur -
chases its own shares or other specified securities in accordance with the provisions
of section 68 of the Companies Act, 2013 (18 of 2013) and the shareholder or holder
of other specified securities is a promoter, the aggregate income-tax payable on such
capital gains shall be—
( a )   the income-tax payable on such capital gains in accordance with the pro -
visions of this Act; and
( b )   an additional income-tax in respect of capital gains specified in column B
of the Table below, computed at the rate specified in column C or column
D of the said Table:
TABLE
Sl.
No.
Income   Rate, where the
promoter is a
domestic company
Rate, where the pro -
moter is other than a
domestic company
A   B   C   D
1.   Short-term capital gains referred
to in section 196 arising from the
transfer of such securities.
2%   10%
2.   Long-term capital gains referred
to in section 197 or section 198
arising from the transfer of such
securities.
9.5%   17.5%
(3) For the purposes of this section,—
( a )   in the case of a company whose shares are listed on a recognised stock
exchange in India, ‘promoter’ shall have the same meaning as assigned to it
in regulation 2( k ) of the Securities and Exchange Board of India (Buy-Back
of Securities) Regulations, 2018 made under the Securities and Exchange
Board of India Act, 1992 (15 of 1992);
( b )   in any other case, “promoter” means,––
( i )   a “promoter” as defined in section 2( 69 ) of the Companies Act, 2013
(18 of 2013); or
( ii )   a person who holds, directly or indirectly, more than 10% of the
shareholding in the company;
10.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to their substitution, sub-sections
(2) and (3) read as under :
‘(2) If the shareholder receives any consideration of the nature referred to in section
2( 40 )( f ), from any company in respect of buy-back of shares, then for the purposes of this
section, the value of such consideration shall be deemed to be   nil .
(3) For the purposes of this section, “specified securities” shall have the same meaning as
assigned to it in   Explanation 1   to section 68 of the Companies Act, 2013 (18 of 2013).’

──────────

SOURCE PDF PAGE 128
( c )   “specified securities” shall have the same meaning as assigned to it in
Explanation 1   to section 68 of the Companies Act, 2013 (18 of 2013). ]
Transactions not regarded as transfer.
70.   (1) The provisions of section 67 shall not apply to transfer—
( a )   by way of distribution of capital assets on the total or partial partition
of a Hindu undivided family;
( b )   of a capital asset by an individual or a Hindu undivided family, under a
will or a gift or an irrevocable trust;
( c )   of a capital asset, not being stock-in-trade, by a company to its subsidiary
company, if—
( i )   the parent company or its nominees hold the whole of the share
capital of the subsidiary company; and
( ii )   the subsidiary company is an Indian company;
( d )   of a capital asset, not being stock-in-trade, by a subsidiary company to
the holding company, if—
( i )   the whole of the share capital of the subsidiary company is held by
the holding company; and
( ii )   the holding company is an Indian company;
( e )   in a scheme of amalgamation, of a capital asset by the amalgamating
company to the amalgamated company, if the amalgamated company
is an Indian company;
( f )   by a shareholder, in a scheme of amalgamation, of a capital asset being
a share or shares held by him in the amalgamating company, if—
( i )   the transfer is made in consideration of allotment to him of any
share or shares in the amalgamated company except when the
shareholder itself is the amalgamated company; and
( ii )   the amalgamated company is an Indian company;
( g )   in a scheme of amalgamation, to him of a capital asset being a share or
shares held in an Indian company by the amalgamating foreign company
to the amalgamated foreign company, if—
( i )   at least 25% of the shareholders of the amalgamating foreign com -
pany continue to remain shareholders of the amalgamated foreign
company; and
( ii )   such transfer does not attract tax on capital gains in the country,
in which the amalgamating company is incorporated;
( h )   in a scheme of amalgamation, of a capital asset, being a share of a for -
eign company, referred to in section 9(10)( a ), which derives directly or
indirectly, its value substantially from the share or shares of an Indian
company, held by the amalgamating foreign company to the amalgamated
foreign company, if—
( i )   at least 25% of the shareholders of the amalgamating foreign com -
pany continue to remain shareholders of the amalgamated foreign
company; and

──────────

SOURCE PDF PAGE 129
( ii )   such transfer does not attract tax on capital gains in the country
in which the amalgamating company is incorporated;
( i )   of a capital asset by a banking company to a banking institution under
a scheme of amalgamation of a banking company with a banking insti -
tution sanctioned and brought into force by the Central Government
under section 45(7) of the Banking Regulation Act, 1949 (10 of 1949);
( j )   in a demerger, of a capital asset by the demerged company to the resulting
company, if the resulting company is an Indian company;
( k )   of shares by the resulting company or issue of shares by such com -
pany, in a scheme of demerger to the shareholders of the demerged
company, if the transfer or issue is made in consideration of demerger of the
undertaking;
( l )   of a capital asset in a demerger, being a share or shares held in an Indi -
an company, by the demerged foreign company to the resulting foreign
company, if—
( i )   the shareholders holding not less than 75% in value of the shares
of the demerged foreign company continue to remain shareholders
of the resulting foreign company; and
( ii )   such transfer does not attract tax on capital gains in the country,
in which the demerged foreign company is incorporated,
and in such a case the provisions of sections 230 to 232 of the Companies
Act, 2013 (18 of 2013) shall not apply;
( m )   of a capital asset in a demerger, being a share of a foreign company,
referred to in section 9(10)( a ), which derives directly or indirectly, its
value substantially from the share or shares of an Indian company, held
by the demerged foreign company to the resulting foreign company, if—
( i )   the shareholders, holding not less than 75% in value of the shares
of the demerged foreign company, continue to remain shareholders
of the resulting foreign company; and
( ii )   such transfer does not attract tax on capital gains in the country
in which the demerged foreign company is incorporated,
and in such a case the provisions of sections 230 to 232 of the Companies
Act, 2013 (18 of 2013) shall not apply;
( n )   in a business reorganisation, of a capital asset by the predecessor co-oper -
ative bank to the successor co-operative bank or to the converted banking
company;
( o )   by a shareholder, in a business reorganisation, of capital asset being
share or shares held by him in the predecessor co-operative bank, if the
transfer is made in consideration of the allotment to him of any share
or shares in the successor co-operative bank or the converted banking
company;

──────────

SOURCE PDF PAGE 130
( p )   of a capital asset, being bonds or Global Depository Receipts as referred
to in section 209(1), made outside India by a non-resident to another
non-resident;
( q )   made outside India, of a capital asset, being rupee denominated bond of
an Indian company issued outside India, by a non-resident to another
non-resident;
( r )   of a capital asset made by a non-resident on a recognised stock exchange
located in any International Financial Services Centre, where the con -
sideration for such transaction is paid or payable in foreign currency,
and such capital asset is—
( i )   bond or Global Depository Receipt referred to in section 209(1); or
( ii )   rupee denominated bond of an Indian company; or
( iii )   derivative; or
( iv )   such other securities as may be notified by the Central Government;
( s )   of a capital asset, being a Government security carrying a periodic pay -
ment of interest, made outside India through an intermediary dealing
in settlement of securities, by a non-resident to another non-resident;
( t )   in a relocation, of a capital asset by the original fund to the resulting
fund;
( u )   by a shareholder or unit holder or interest holder, in a relocation, of a
capital asset being share or unit or interest held by him in the original
fund in consideration for the share or unit or interest in the resultant
fund;
( v )   of a capital asset by India Infrastructure Finance Company Limited to an
institution established for financing the infrastructure and development,
set up under an Act of Parliament and notified by the Central Government
for the purposes of this clause;
( w )   of a capital asset, under a plan approved by the Central Government, by
a public sector company, to—
( i )   another public sector company notified by the Central Government
for the purposes of this clause; or
( ii )   the Central Government; or
( iii )   a State Government;
10a
[ ( x )   by way of redemption, of Sovereign Gold Bond issued by the Reserve Bank
of India under the Sovereign Gold Bond Scheme, 2015 or any subsequent
Sovereign Gold Bond Scheme, if held by an individual from the date of
original issue till maturity; ]
10a.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, clause ( x )
read as under :
“( x )   of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign
Gold Bond Scheme, 2015, by way of redemption, by an individual;”