Cost of acquisition rules clarify valuation and allocation for capital gains, with special treatment for intangibles and pre-existing equity holdings.
The provision defines cost of improvement and cost of acquisition for capital gains, treating improvements to specified intangibles as nil, excluding deductible expenditures, and reducing acquisition cost by prior depreciation on goodwill. It prescribes allocation rules for acquisitions by purchase, allotment, bonus, subscription and renunciation, and provides alternative valuation anchors-including an option to adopt a historic fair market value, exchange quotes, net asset value and the Cost Inflation Index-for certain pre-existing and unlisted equity holdings.