Section 47(vii) - Transfer by a shareholder, in a scheme of amalgamation, of the shares held by him in the amalgamating company

Transfer of shares in an amalgamation under Section 47(vii) is tax-neutral, exempt from capital gains tax.

Section 47(vii) of the Income Tax Act addresses the transfer of shares by a shareholder in a scheme of amalgamation, specifically when the amalgamated company is a domestic Indian company. Such transactions are not considered transfers under the law, meaning they do not attract capital gains tax. The cost of acquisition for the shares in the amalgamating company is retained, and the period of holding includes the duration the previous owner held the shares. This provision ensures continuity and tax neutrality in corporate restructuring through amalgamations.