Treatment of capital gains arising on compulsory acquisition of lands and buildings in Clause 84 of the Income Tax Bill, 2025 vs. Section 54D of the Income Tax Act, 1961

Capital gains deferral on compulsory acquisition permits tax relief when compensation is reinvested in similar industrial assets.

Clause 84 provides a deferral regime for capital gains on compulsory acquisition where compensation reinvested in similar industrial land or buildings within three years is either exempt or adjusts the cost basis: excess gains over new asset cost are taxed as income and the new asset's cost is set to nil for future computations, while gains equal to or below cost reduce the asset's cost. Unutilised gains must be deposited by the return filing due date and are treated as part of the deemed cost; unutilised amounts after the specified period are charged as income and subject to notified withdrawal rules.