Section 54G - Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area

Section 54G: Deferral of Capital Gains on Shifting Urban Industrial Undertakings by Investing in New Assets or Schemes

Where capital gain arises from transfer of urban-area industrial assets effected because the industrial undertaking is shifted to a non-urban area, Section 54G permits deferral/exemption if, within one year before or three years after transfer, the taxpayer purchases new plant or machinery, acquires or constructs building/land, shifts the original asset and establishment, or incurs specified scheme expenses. If gain exceeds the cost of such 'new assets,' the excess is taxable; if not, the gain is exempt and reduces the cost basis of the new asset. Unapplied gain must be deposited in a notified scheme by the return date and becomes taxable if not utilised within the three-year period, subject to permitted withdrawals.