Comparison of Section 90 "Meaning of "adjusted", "cost of improvement" and "cost of acquisition." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....omputation for a wide range of assets (including intangibles, shares and units), affecting taxpayers, tax administrators and capital markets participants. Effective date or decision date: Not stated in the document. Background & Scope Statutory hooks: references throughout to sections 72 and 73 of the Income Tax law, section 2(h) of the Securities Contracts (Regulation) Act, 1956, and section 32(1) of the Income-tax Act, 1961. The clause purports to delineate the meaning of "cost of improvement" and "cost of acquisition" across categories of capital assets - intangibles (including goodwill and rights), physical assets, financial assets (shares, units, securities), long-term equity assets acquired before 1 Feb 2018, and assets acquired bef....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....pretation The text signals legislative intent to: (a) exclude improvements to specified intangibles from being capitalised as "cost of improvement"; (b) protect taxpayers holding pre-2001 assets by allowing a 1 Apr 2001 fair market value alternative; (c) provide rules addressing bonus/allotment/rights and renunciation; and (d) adjust acquisition cost for goodwill where depreciation was previously claimed. The clause employs objective valuation anchors (exchange quote on 31 Jan 2018, net asset value) and the Cost Inflation Index to compute proportionate indexed cost for certain unlisted equity situations. No broader legislative history, policy justification or explanatory memorandum is provided in the document: Not stated in the document. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o renouncer plus amounts paid to company (per (6)). Interplay The clause expressly interacts with: * Sections 72 and 73 (capital gains) - the entire clause is for their purposes. * Section 32(1) (depreciation) for the goodwill adjustment (sub-section (4)). * Section 2(h) of the Securities Contracts (Regulation) Act for definition of "financial asset" (sub-section (5)). * Section 70 referenced in sub-clause (8)(b)(iv) in relation to certain transactions giving rise to shares - the Bill text contains variant drafting which affects the category of transactions referenced (see Differences section below). Practical Implications * Compliance: Taxpayers with intangibles cannot capitalise improvements for indexation/adjustment - taxpay....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....g-term equities pre-Feb-2018. * Special valuation anchors (31 Jan 2018 exchange price, NAV, Cost Inflation Index) are prescribed for certain pre-2018 equity assets; taxpayers must preserve supporting market data. * Depreciation earlier claimed on goodwill reduces purchase price for acquisition cost computation. * Assets held before 1 Apr 2001 may use the 1 Apr 2001 FMV alternative, but land/building FMV limited by stamp duty value. * The clause imposes multiple evidentiary and record-keeping obligations tied to valuation, payments on renunciation and historical depreciation records. * Where the document is silent on legislative intent, administrative procedures, transitional rules and effective date, the text offers no guidance: N....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of sections 72 and 73(a) and (b), and subject to..." - Bill's insertion of "(a) and (b)" appears anomalous. * Practical impact: introduces ambiguity about whether the reference is to sections or to subclauses; may require clarification to avoid limiting application. * Fair market value wording for equities (sub-clause (8)(b)(ii) and (iv)(B)/(C)): The Bill uses "irrespective of sub-clause (i), if there is no trading ..." versus the Act's slightly different conditional phrasing; importantly, Bill's (8)(b)(iv)(B) references transactions "mentioned in section 70" while the Act uses "not regarded as transfer mentioned in section 70." * Practical impact: altering whether certain IPO/offer for sale situations qualify can material....