Exemption from capital gains tax when an industrial venture relocates from an urban area

When the capital gain results from the transfer of a capital asset, such as machinery, plant, building, land, or any rights in building or land used for the business of an industrial undertaking located in an urban area, which is accomplished during, or as a result of, the relocation of such industrial undertaking to any area and the assessee must do the following within a window of one year before two or three years following the date the transfer occurred:-

  (a) bought brand-new equipment or plant for the industrial undertaking's operations at the location where the said company is shifting;

  (b) purchased land built a structure, or developed a facility for his business in the region;

  (c) transferred the original asset and the location of such an undertaking there; and

  (d) incurred costs for any other purpose that may be outlined in a plan crafted by the Central Government in order to fulfill the requirements of this section,

then, instead of being charged to revenue as income of the prior year in which the transfer occurred, the capital gain will thereafter be handled in line with the rules of this section listed below, which are,

   (i) The difference between the quantity of the capital gain and the price of the new asset must be charged under Section 45 as the income of the prior year if the amount of the capital gain exceeds the cost and expenditures expended in relation to all or any of the reasons indicated in Clauses (a) to (d); therefore the cost will be zero in order to calculate any capital gains related to the new asset that results from a transfer within three years after the asset's purchase, acquisition, construction, or transfer, as applicable; or

   (ii) if the capital gain is equivalent to, or less than, the price of a new asset, the capital gain shall not be taxed under section 45; and for the requirement of calculating in respect of the new property any capital gain arising from its relocation within three years of its purchase, acquisition, construction, or transfer, as the case may be, the cost shall be diminished by the amount of the capital gain.

Have a view on 80g.

"Urban area" refers to any area within the boundaries of a municipal corporation or municipality that the Central Government may, by general or special order, declare to be an urban area for the applications of this sub-section, taking into account the population, concentration of industries, need for proper planning of the area, and other relevant factors.

Before filing the return, the assessee must deposit the portion of the capital gain that he has not allocated to the costs and expenses related to all or any of the purposes listed in clauses (a) through (d) of the first sub-section.

Don't leave just now. There is more stuff in section 80g.