Capital Gains under the Income-tax Act & Its Computation

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  • 18 Min Read
  • By Taxmann
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  • Last Updated on 31 March, 2025

capital gains

Capital gains refer to the profit or gain arising from the transfer of a capital asset. It is the difference between the sale price (full value of consideration) and the cost of acquisition/improvement of the asset, after deducting any expenses related to the transfer. This gain is taxable under the head "Capital Gains" as per the Income-tax Act, 1961, unless specifically exempted.

Table of Contents

  1. What is the Basis of Charge [Sec. 45]
  2. What is Included and Excluded from Capital Asset?
  3. What is Transfer of Capital Asset?
  4. Capital Gains – How Computed? [Sec. 48]
  5. What is the Full Value of Consideration? [Sec. 48]
  6. How to Find Out Expenditure on Transfer?
  7. What is Cost of Acquisition?
  8. What is Cost of Improvement?
  9. How to Convert Cost of Acquisition/Improvement into indexed Cost of Acquisition/Improvement?
  10. Capital Gain in Special Cases – How to Find Out?
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1. What is the Basis of Charge? [Sec. 45]

Any gain arising from the transfer of a capital asset during a previous year is chargeable to tax under the head “Capital gains” in the immediately following assessment year, if it is not eligible for exemption under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB1. In other words, capital gain’s tax liability arises only when the following conditions are satisfied –

Condition 1 There should be a capital asset. See para 2.
Condition 2 The capital asset is transferred by the assessee. For meaning of transfer, see para 3.
Condition 3 Such transfer takes place during the previous year. See para 3.2.
Condition 4 Any profit or gains arises as a result of transfer. For computation of capital gain, see para 4.
Condition 5 Such profit or gains is not exempt from tax under sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB. See para 103.

If the aforesaid conditions are satisfied, then capital gain is taxable in the assessment year relevant to the previous year in which the capital asset is transferred.

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2. What is Included in and Excluded from Capital Asset?

“Capital asset” is defined by section 2(14).

1. Positive list – “Capital asset” means property of any kind, whether fixed or circulating, movable or immovable, tangible or intangible. Besides, it includes the following –

  • Any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever.
  • Property of any kind held by an assessee (whether or not connected with his business or profession).
  • Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the SEBI Act.
  • Any unit-linked insurance plan (ULIP policy) issued on or after February 1, 2021 to which exemption under section 10(10D) does not apply (i.e., if insurance premium payable in any previous year during the term of such policy exceeds Rs. 2.50 lakh).

2. Negative list – The following assets are excluded from the definition of “capital assets” –

  • Stock-in-trade (other than securities referred to in point 3 above).
  • Personal effects (movable assets).
  • Agricultural land in a rural area in India.
  • A few gold bonds and special bearer bonds (this point does not have any practical utility).
  • Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015.

2.1 Stock-in-trade is Not a Capital Asset

Any stock-in-trade (not being securities held by a Foreign Institutional Investor), consumable stores or raw material held for the purpose of business or profession is not a capital asset. This is because of the fact that any surplus arising on sale or transfer of stock-in-trade, consumable stores or raw material is chargeable to tax as business income under section 28. What shall be included in the term “stock-in-trade” must always be dependent upon the nature of the business of the taxpayer. For instance, if the taxpayer deals in house properties, then such properties are stock-in-trade and, consequently, they are not capital asset. If a dealer in properties transfers his stock-in-trade (i.e., house properties), the resulting profit is business income not capital gains. Conversely, if a doctor transfers a house property, the resulting income is taxable under the head “Capital gains”.

2.2 Personal Effects (Being Movable Assets) are Not Capital Assets

Any movable property (including wearing apparel and furniture) held for personal use of the owner or for the use of any member of his family dependent upon him, is not a “capital asset” for the purpose of income under the head “Capital gains”. However, the following are not “personal effects” (in other words, the following are “capital assets”) even if these are for personal use—jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art.

2.3 Agricultural Land Situated in Rural Area is Not a Capital Asset

Agricultural land in India in a rural area2 is not capital asset.

2.4 Short-term/Long-term Capital Assets

There are two categories of capital assets – short-term capital gains and long-term capital gains. Effective July 23, 2024, a holding period of more than 24 months is required for an asset to be classified as long-term capital asset. However, the holding period is reduced to 12 months for the following assets (to become long¬ term capital assets) –

  • Securities2a (i.e., shares, debentures and bonds) listed on a recognised stock exchange in India.
  • Units of an equity-oriented mutual fund, whether listed or unlisted.
  • Units of a debt-oriented mutual fund listed on a recognised stock exchange in India.
  • Zero coupon bonds, whether listed or unlisted

Position Prior to July 23, 2024 – Generally, holding period should be more than 36 months to become a long¬ term capital asset. However, in a few cases, the period of holding is 24 months/12 months2b.

How to Determine Period of Holding – Specific rules are provided by the Income-tax Act to determine period of holding of a capital asset in a few cases.

Why Capital Assets Are Divided Into Short/Long-Term Assets – The tax incidence under the head “Capital gains” depends upon whether the capital gain is short-term or long-term. Long-term capital gain is generally taxable at a lower rate. If the asset transferred is a short-term capital asset, capital gain will be short-term capital gain.

Conversely, long-term capital gain arises on transfer of a long-term capital asset.

  • In the case of transfer of a depreciable asset (other than an asset used by a power generating unit eligible for depreciation on straight line basis), capital gain (if any) is taken as short-term capital gain, irrespective of period of holding.

3. What is Transfer of Capital Asset?

Transfer, in relation to a capital asset, includes sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law [sec. 2(47)]3.

3.1 Certain Transactions Not Included in Transfer

For the purpose of section 45, the following transactions are not regarded as transfers (in other words, in the following cases4, there is no capital gain) –

  1. Distribution of assets in kind by a company to its shareholders on its liquidation.
  2. Any distribution of capital assets in kind by a Hindu undivided family to its members at the time of total or partial partition.
  3. Any transfer of a capital asset by an individual/HUF under a gift or a will or an irrevocable trust (exception – gift of ESOP5-6 shares is chargeable to tax).
  4. Transfer of capital asset between holding company and its 100 per cent subsidiary company, if the transferee­company is an Indian company.
  5. Transfer of capital asset in the scheme of amalgamation/demerger, if the transferee company is an Indian company.
  6. Transfer of shares in amalgamating company/demerged company in lieu of allotment of shares in amalgam­ated company/resulting company in the above case.
  7. Transfer of capital asset in a scheme of amalgamation of a banking company with a banking institution.
  8. Any transfer in a business reorganization, of a capital asset by the predecessor co-operative bank to the successor co-operative bank or the converted banking company.
  9. Transfer of shares in an Indian company held by a foreign company to another foreign company in a scheme of amalgamation/demerger of the two foreign companies, if a few conditions are satisfied.
  10. Transfer of a capital asset by a non-resident of foreign currency convertible bonds or Global Depository Receipts to another non-resident if the transfer is made outside India and if a few conditions are satisfied.
  11. Transfer by an individual of Sovereign Gold Bond (issued by RBI under the Sovereign Gold Bond Scheme, 2015) by way of redemption.
  12. Transfer of a capital asset, being conversion of gold into Electronic Gold Receipt issued by a Vault Manager, or conversion of Electronic Gold Receipt into gold.
  13. Transfer of any work of art, archaeological, scientific or art collection, book, manuscript, drawing, painting, photograph or print, to the Government or a University or the National Museum, National Art Gallery, National Archives or any other notified public museum or institution.
  14. Any transfer by way of conversion of bonds or debentures, debenture-stock or deposit certificate in any form, of a company into shares or debentures of that company.
  15. Transfer by way of conversion of preference shares of a company into equity shares of that company.
  16. Land transferred by a sick industrial company, if a few conditions are satisfied.
  17. Transfer of a capital asset by a private company/unlisted public company to a limited liability partnership in the case of conversion of company into LLP, if a few conditions are satisfied.
  18. Transfer of capital assets at the time of conversion of a firm/sole proprietary concern in a company, if a few conditions are satisfied.
  19. Any transfer involved in a scheme for lending of any securities, if a few conditions are satisfied.
  20. Any transfer of capital asset in a reverse mortgage.
  21. Transfer of a capital asset (being a Government security carrying periodic payment of interest) made outside India through an intermediary dealing in settlement of securities by a non-resident to another non­resident.
  22. Transfer of a capital asset (being share of a special purpose vehicle) to a business trust in exchange of units allotted by that trust to the transferor.
  23. Any transfer by a unit holder of units held by him in the consolidating scheme of a mutual fund, made in consideration of the allotment to him of units in the consolidated scheme of the mutual fund, if the consolidation is of two or more schemes of equity oriented fund or of two or more schemes of a fund other than equity oriented fund.
  24. Transfer by a unit holder of units held by him in the consolidating plan of a mutual fund scheme, made in consideration of the allotment to him of units, in the consolidated plan of that scheme of the mutual fund.
  25. Transfer, 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.
  26. Transfer of capital asset [being bonds/GDR referred to in section 115AC(1) or rupee denominated bond of an Indian company or derivative or (notified) securities] made by a non-resident on a recognised stock exchange located in any International Financial Services Centre and where the consideration is paid/payable in foreign currency.
  27. Transfer of a capital asset (being an interest in a joint venture) held by a public sector company, in exchange of shares of a company incorporated outside India by the Government of a foreign State, in accordance with the laws of that foreign State.

If the aforesaid conditions are satisfied, then the transaction is not treated as “transfer”.

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3.2 Transfer When Complete and Effective

Generally, capital gain is taxable in the year in which capital asset is transferred. Different rules are applicable in case of movable/immovable assets to find out when a capital asset is “transferred”.

  • Immovable property when documents are registered Title to immovable assets will not pass till the conveyance deed is executed or registered.
  • Immovable property when documents are not registered Even if the documents are not registered but the following conditions of section 53A of the Transfer of Property Act are satisfied, ownership in an immovable property is “transferred”—

(a) there should be an agreement to sell (registered);

(b) the transferee has paid consideration or is willing to perform his part of the contract; and

(c)the transferee should have taken possession of the property.

When these conditions are satisfied, the transaction will constitute “transfer” for the purpose of capital gains.
ital gains.

  • Movable property  Title to a movable property passes at the time when property is delivered pursuant to a contract to sell. Entries in the books of account are not relevant for determining date of transfer.

4. Capital Gains How Computed? [Sec. 48]

Computation of capital gains depends upon the nature of capital asset transferred, viz.,short-term capital asset or long-term capital asset. Capital gain arising on transfer of a short-term capital asset is short-term capital gain, whereas transfer of long-term capital asset generates long-term capital gain. The tax incidence is generally higher in the case of short-term capital gain as compared to long-term capital gains.

The method of computation of short-term and long-term capital gain is as follows –

Computation of short-term capital gain Computation of long-term capital gain
1. Find out full value of consideration [see para 5] 1. Find out full value of consideration [see para 5]
2. Deduct the following –

a. expenditure incurred wholly and exclusively in connection with such transfer [see para 6];

b. cost of acquisition [see para 7]; and

c. cost of improvement [see para 8].

2. Deduct the following –

a. expenditure incurred wholly and exclusively in connection with such transfer [see para 6];

b. cost of acquisition7; and

c. cost of improvement7

3. From the resulting sum deduct the exemption8 provided by sections 54B, 54D, 54G and 54GA 3. From the resulting sum deduct the exemption provided by sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB
4. The balance amount is short-term capital gain. 4. The balance amount is long-term capital gain.

Notes –

  1. Securities transaction tax is not deductible while computing income under the head “Capital gains”.
  2. From the assessment year 2021-22, amount chargeable to tax under section 45(4) in the hands of specified entity (which is attributable to the capital asset being transferred by the specified entity) (calculated as per rule 8AB) shall be deducted to compute long-term or short-term capital gains [see para 10.7].

4.2 Capital Gains Exempt from Tax

In the cases given below, capital gains are not chargeable to tax by virtue of section 10. Conversely, in the cases given below if assets are transferred at a loss, such capital loss is not taken into consideration.

4.2.1 Capital Gain on Transfer of US64 [Sec. 10(33)]

Any income arising from the transfer of a capital asset being a unit of US 64 is not chargeable to tax where the transfer of such assets takes place on or after April 1, 2002. This rule is applicable whether the capital asset (US64) is long-term capital asset or short-term capital asset.

4.2.2 Long-term Capital Gain on Transfer of BSE-500 Equity Shares [Sec. 10(36)]

This exemption is available if the following conditions are satisfied –

  1. Capital gain arises on transfer of long-term equity shares (being shares in a BSE-500 Index of the Bombay Stock Exchange, as on March 1, 2003).
  2. These shares were purchased on or after March 1, 2003 but before March 1, 2004.
  3. Capital gain arises on transfer of these shares in a recognized stock exchange.

4.2.3 Capital Gain on Compulsory Acquisition of Urban Agriculture Land [Sec. 10(37)]

Section 10(37) is applicable if the following conditions are satisfied—

  1. The assessee is an individual or a Hindu undivided family.
  2. He or it owns an agriculture land situated in urban area mentioned in section 2(14)(iii)(a)/(b).
  3. There is transfer of the agriculture land by way of compulsory acquisition or the consideration for transfer is approved or determined by the Central Government (not by a State Government) or RBI.
  4. The agriculture land was used by the assessee (and/or his parents if the land was owned by an individual) for agricultural purposes during 2 years immediately prior to the date of transfer.
  5. The asset may be long-term capital asset or short-term capital asset.
  6. Capital gain arises from compensation (and/or additional compensation) or consideration which is received by the assessee after March 31, 2004.

If the above conditions are satisfied, capital gain (short-term or long-term) is exempt from tax.

4.2.4 Compensation Under Section 96 of RFCTLARR Act, 2013

Capital gain arising out of any award/agreement under Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, is exempt from tax.

4.2.5 Capital Gain Exemption Under Section 115JG(1)

Under section 115JG(1) capital gains which arise on conversion of an Indian branch of a foreign bank into an Indian subsidiary, is not chargeable to tax. The exemption is available only if the conversion takes place in accordance with the scheme framed by RBI and subject to the conditions notified by the Central Government.

5. What is the Full Value of Consideration? [Sec. 48]

Full value of consideration is the consideration received or receivable by the transferor in lieu of assets, which he has transferred. Such consideration may be received in cash or in kind. If it is received in kind, then fair market value of such assets is taken as full value of consideration. Full value of consideration does not mean market value of that asset which is transferred.

  • Adequacy of consideration Adequacy or inadequacy of consideration is not a relevant factor for the purpose of determining full value consideration. However, in the case of transfer of land or building (or both), if stamp duty value is more than 110 per cent of sale consideration, the stamp duty value is taken as full value of consideration.
  • Receipt of consideration  It makes no difference whether (or not) “full value of consideration” is received during the previous year. Even if consideration is not received, capital gain is chargeable to tax in the year of transfer.
  • If consideration is not determinable  Where in the case of a transfer, consideration for the transfer of a capital asset(s) is not determinable, then for the purpose of computing capital gains, the fair market value of the asset shall be taken to be the full market value of consideration [sec. 50D].

6. How to Find Out Expenditure on Transfer?

Expenditure incurred wholly and exclusively in connection with transfer of capital asset is deductible from full value of consideration. The expression “expenditure incurred wholly and exclusively in connection with such transfer” means expenditure incurred which is necessary to effect the transfer.

Examples of such expenses are – brokerage or commission paid for securing a purchaser, cost of stamp, registration fees borne by the vendor, travelling expenses incurred in connection with transfer, litigation expenditure for claiming enhancement of compensation awarded in the case of compulsory acquisition of assets.

7. What is Cost of Acquisition?

Cost of acquisition of an asset is the value for which it was acquired by the assessee. Expenses of capital nature for completing or acquiring the title to the property are includible in the cost of acquisition. Interest on money borrowed to purchase asset is part of actual cost of asset.

The amount paid for discharge of a mortgage is part of “cost of acquisition”, if the mortgage was not created by the transferor. For instance, on June 1, 2019, X took a loan of Rs. 5 lakh by mortgaging his house property. X could not repay the loan during his lifetime and after his death on July 2, 2021, the property (with mortgage) is transferred to Mrs X. Mrs X transfers the property on May 2, 2023 and before transfer, a sum of Rs. 7.2 lakh is paid to clear the mortgage. Rs. 7.2 lakh will be deductible as part of cost of acquisition of the property while calculating capital gains in the hands of Mrs X. If, however, loan is taken by Mrs X, then repayment of loan will not be deductible as part of cost of acquisition of the property while calculating capital gains in the hands of Mrs X.

Cost of acquisition shall not include the deductions claimed on the amount of interest under section 24(b) or under the provisions of Chapter VI-A.

8. What is Cost of Improvement?

Cost of improvement is capital expenditure incurred by an assessee in making any additions/improvement to the capital asset. It also includes any expenditure incurred to protect or complete the title to the capital assets or to cure such title. Any expenditure incurred to increase the value of the capital asset is treated as cost of improvement.

  • Improvement cost incurred before April 1, 2001 Cost of improvement incurred before April 1, 2001 is never taken into consideration. This rule does not have any exception.
  • Double deduction not possible Cost of improvement shall not include the deductions claimed on the amount of interest under section 24(b) or under the provisions of Chapter VI-A.

9. How to Convert Cost of Acquisition/Improvement into Indexed Cost of Acquisition/Improvement?

Indexed cost of acquisition and indexed cost of improvement are deductible if a long-term capital asset is transferred before July 23, 2024. Conversely, if the long-term capital asset is transferred on or after July 23, 2024, the indexation benefit is not available, except for the one exception mentioned in section 112. The method for computing the indexed cost of acquisition and the indexed cost of improvement is discussed in Annex 1 of this chapter.

10. Capital Gain in Special Cases – How to Find Out?

In the following cases, the method of computation is different from what is discussed in the above paras –

10.1 Cost to the Previous Owner [Sec. 49(1)]

If a person has acquired a capital asset in the circumstances specified under section 49(1), then to calculate capital gain at the time of transfer of such asset cost to the previous owner is taken as cost of acquisition. This rule is always applicable and does not have any exception. Circumstances specified by section 49(1) are as follows –

(a) acquisition of property on any distribution of assets on the total or partial partition of a Hindu undivided family;

(b) acquisition of property under a gift or will;

(c) acquisition of property—

i. by succession, inheritance or devolution, or

ii. on any distribution of assets on the dissolution of a firm, body of individuals or other association of persons where such dissolution had taken place before April 1, 1987, or

iii. on any distribution of assets on the liquidation of a company, or

iv. under a transfer to a revocable or an irrevocable trust, or

v. by a wholly-owned Indian subsidiary company from its holding company, or

vi. by an Indian holding company from its wholly-owned subsidiary company, or

vii. under a scheme of amalgamation, or

viii. under a scheme of demerger; or

ix. under a scheme of conversion of private company/unlisted company into LLP; or

x. on any transfer in the case of conversion of firm/sole-proprietary concern into company; or

xi. on any transfer, in relocation, of a capital asset by the original fund to the resulting fund which comes under section 47(viiac)/(viiad); or

xii. on any transfer which comes under section 47(viiae)/(viiaf); or

(d) acquisition of property, by a Hindu undivided family where one of its members has converted his self-acquired property into joint family property after December 31, 1969.

  • Other points – The following points should be duly considered —
    1. No option – If a capital asset was acquired in any one of the modes given above, then cost to the previous owner shall be taken as “cost of acquisition” for the purpose of calculating capital gain at the time of its transfer. There is no option in this regard.
    2. Last previous owner – Where the previous owner has acquired the property in the aforesaid manner, the previous owner of the property means the last previous owner who had acquired the property by means other than those discussed above. Cost of any improvement of the asset borne by the previous owner, or the assessee, will be added to such cost.
    3. Period of holding of previous owner – In order to find out whether the capital asset is short-term or long-term in the above cases, the period of holding of the previous owner shall be taken into consideration.
    4. Indexation – The benefit of indexation will be available from the year in which the asset was first held by the previous owner9.

10.2 Cost of Acquisition Being the Fair Market Value as on April 1, 2001

In the following cases, the assessee may take at his option, either actual cost or the fair market value of the asset as on April 1, 2001 as cost of acquisition –

  1. where the capital asset became the property of the assessee before April 1, 2001; or
  2. where the capital asset became the property of the assessee by any mode referred to in section 49(1) and the capital asset became the property of the previous owner before April 1, 2001.
  • The following points should be duly considered —
  1. In the case of land and building, fair market value on April 1, 2001 cannot exceed stamp duty value (wherever available) of such assets on April 1, 2001.
  2. Adopting fair market value on April 1, 2001 (in place of actual cost of acquisition) is optional. An assessee may (or may not) opt for it.
  3. The option is available only when an asset was acquired by the assessee [or by the previous owner in case section 49(1) is applicable] before April 1, 2001.
  4. When option is available, the cost of the asset or fair market value as on April 1, 2001, whichever is higher, is taken as the cost of acquisition.
  5. The option is not available in the case of depreciable assets.
  6. Further option is not available in respect of transfer of a capital asset being goodwill of a business or profession; trade mark/brand name associated with a business; right to manufacture, produce or process any article or thing; right to carry on business/profession; tenancy right; route permits or loom hours (whether self generated or otherwise).

10.3 Capital Gain in the Case of Transfer of Depreciable Assets [Sec. 50]

The following rules10 are applicable –

  • Capital gain arises only in two cases – If a depreciable asset is transferred, capital gain (or loss) will arise only in the following two cases –
    1. When on the last day of the previous year written down value of the block of assets is zero [sec. 50(1)].
    2. When the block of assets is empty on the last day of the previous year [sec. 50(2)].
      In no other case capital gain is chargeable to tax, when a depreciable asset is transferred. This rule is equally applicable whether depreciation is allowed in the current year (or any of earlier years).

1. Exemption under these sections can be claimed even by an assessee who opts for the alternative tax regime.

2. Rural area for the above purpose is any area which is outside the jurisdiction of a municipality or cantonment board having a population of 10,000 or more and also which does not fall within distance (to be measured aerially) given below –

2 kilometers from the local limits of municipality/cantonment board If the population of the municipality/cantonment board is more than 10,000 but not more than 1 lakh
6 kilometers from the local limits of municipality/cantonment board If the population of the municipality/cantonment board is more than 1 lakh but not more than 10 lakh
8 kilometers from the local limits of municipality/cantonment  board If the population of the municipality/cantonment board is more than 10 lakh

For the above purpose, “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year.

2a. Securities for this purpose include shares, bonds, debentures, debenture stock (or other marketable securities of a like manner), derivatives, units, Government securities or rights/interests in securities.

2b. 12 months – In the case of securities2a listed in a recognised stock exchange in India, units of UTI (whether listed or not), units of equity oriented mutual fund (whether listed or not), and zero coupon bonds (whether listed or not).
24 months – Unlisted shares in a company and immovable property.
3. The definition of “transfer” under section 2(47) shall also apply for the purpose of computation of tax under section 115BBH pertaining to income from transfer of any virtual digital asset (whether capital asset or not).

4. Provisions of sections 46 and 47 are given in brief (keeping in view the requirement of undergraduate/IPC students).

5-6. In the case of gift of ESOP shares, fair market value on the date of gift is taken as full value of consideration.

7. The indexed cost of acquisition and the indexed cost of improvement are deductible if a long-term capital asset is transferred before July 23, 2024. Conversely, if the long-term capital asset is transferred on or after July 23, 2024, the indexation benefit is not available, except for the one exception mentioned in section 112 [for the exception, see para 104.1-3]. The method for computing the indexed cost of acquisition and the indexed cost of improvement is discussed in Annex 1 of this chapter.

8. Exemption under these sections can be claimed even by an assessee who pays tax under the alternative tax regime.

9. Conversely, if the long-term capital asset is transferred on or after July 23, 2024, the indexation benefit is not available, except for the one exception mentioned in section 112 [for the exception, see para 104.1-3], The method for computing the indexed cost of acquisition and the indexed cost of improvement is discussed in Annex 1 of this chapter.

10. These rules are not applicable in the case of transfer of assets by a power generating unit which claims depreciation on straight line basis.

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