Exemption of capital gains on transfer of certain capital assets in case of shifting of an industrial undertaking from an urban area to any SEZ [Section 54GA] :

Eligible assessees – Any assessee

Conditions to be fulfilled

•  There must be transfer of capital assets
•  Such transfer must be effected in the course of, or in consequence of the shifting of an
• industrial undertaking from an urban area to any SEZ, whether developed in an urban area or not.
•  The capital asset should be either machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situated in an urban area.
•  The assessee should, within a period of 1 year before or 3 years after the date of transfer,
•  purchase machinery or plant for the purposes of business of the industrial undertaking in the SEZ;
•  acquire building or land or construct building for the purposes of his business in the SEZ;
•  shift the industrial undertaking and transfer the establishment of such undertaking to the SEZ; and
•  incur expenses for such other purposes as may be specified in a scheme framed by the Central Government.

Quantum of exemption

•  If cost of new assets plus expenses incurred for shifting ≥ Capital gains, entire capital gains (short-term or long-term) is exempt.
•  If cost of new assets plus expenses incurred for shifting < Capital gains, capital gains (short-term or long-term) to the extent of such cost and expenses is exempt.

Consequences if the new asset is transferred within a period of 3 years

•  If the new asset is transferred within a period of 3 years of its purchase or construction, then the capital gain, which was exempt earlier under section 54G would be deducted from the cost of acquisition of the new asset for the purpose of computation of shortterm capital gains in respect of the transfer of the new asset.