Industries undertaking tax exemptions

When an industrial enterprise located in an urban region relocates to another location, the capital gain from the transfer of a capital asset, such as machinery, plant, a building, land, or any rights in a building or land utilised for the activity of the industrial undertaking, gets implemented and within a period of one year prior to or three years following the date on which the transfer took place, the assessee has made purchases of new equipment or plant, purchased real estate, built a building, moved the original asset, and transferred the establishment of the undertaking to the new location.

In the above-mentioned case, instead of the capital gain being charged to income tax, it shall be dealt with in accordance with the following provision:

1. The difference between the amount of capital gain and the cost of the new asset should be charged as income for the prior year if the amount of capital gain exceeds the cost and expenditures incurred in relation to all of the reasons indicated in the clauses; and the cost shall be zero for the purpose of calculating any capital gain arising from the transfer of the new asset within three years after the asset's purchase, acquisition, construction, or transfer, as applicable.

2. If the cost of a new asset is equal to or less than the amount of the capital gain, section 45 will not apply to that gain; and for the purpose of computing any capital gains related to the new asset that result from transfers made within three years after the asset's purchase, acquisition, construction, or transfer, as applicable, the amount of the capital gain shall be deducted from the cost.

Click here to know about tax exemption.

Urban area is defined in this sub-section as 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, taking into account the population, the concentration of industries, the need for proper planning of the area, and other relevant factors.

Any assets or income from them that are left over after the liabilities, must be paid off or immediately given to the people whose custody the assets were taken. The Central Government must pay simple interest at a rate of fifteen percent annually on the amount by which the total of the funds held in reserve and the revenues from the sales of assets used to pay off outstanding debts exceeds the total of the sums necessary to cover the debts.

Pay a visit to tax exemptions under section 80g.