Section 54GA of The Income Tax Act, 1961

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The Income Tax Act, of 1961 is the main statute of Income Tax in India. It provides for levy, administration, collection, and recovery of Income Tax.

Following are the conditions that are required to be satisfied in order to claim an exemption under Section 54GA:

• All the categories of persons are eligible to claim an exemption under section 54GA.

• Both short-term, as well long-term capital gains, are eligible for exemption under section 54GA.

• Following are the transfers of the capital asset that is eligible, for the transfer is made by an industrial undertaking situated in an urban area –

1. Plant or machinery

2. Land or building

3. Any rights in land or building used for business purposes.

• The amount can be invested for shifting the industrial undertaking situated in an urban area to Special Economic Zone (developed in an urban or rural area) for the following purpose –

1. For purchasing of plant or machinery in the industrial undertaking shifted in Special Economic Zone.

2. For acquiring land or purchasing/ constructing building for the purpose of the business of an industrial undertaking shifted in Special Economic Zone.

3. Any expenditure incurred for shifting of the industrial undertaking in Special Economic Zone.

4. Any other expenditure as specified by the Central Government.

• The amount which can be invested is 1 year before or 3 years after the date of transfer.

• The claimant cannot transfer the new asset before the period of three years from the date of acquisition/construction or transfer.

If the above conditions are fully satisfied, the claimant would be able to get an exemption under Section 54GA.