Exemptions on Short-Term Capital Gains Tax

1. Any Short-Term Capital Gain arising on transfer of units of Unit Scheme 1964 if Unit Trust of India is exempt under Section 10(33).

2. Exemption on Short-Term Capital Gain arising on transfer of Agriculture Land (Section 54B)

• Applicable for: Individual and Hindu Undivided Families (HUF).
• Capital Asset Covered: Agriculture land held and used for agricultural purposes by the assessee or his parents for at least 24 months or more before the date of transfer.
• Exemption Applicability: Exemption can be claimed if an assessee uses the amount of capital gain to purchase the new agricultural land within a period of 2 years from the date of transfer.
• Exemption Amount: Cost of new land or Amount of Capital Gain, whichever is lower.
• Lock-in period: 3 years. Any transfer of new land within 3 years shall result in the withdrawal of the exemption.
• Capital Gain Account Scheme (CGAS): If an assessee fails to use full or part of the amount for the purchase of new agricultural land before the due date, such amount shall be deposited in the Capital Gains Deposit Account Scheme (CGAS) before the due date.

3. Exemption on Short-Term Capital Gain on compulsory acquisition of property used for industrial purposes (Section 54D)

• Applicable for: All Assessee
• Capital Asset Covered: Transfer of Land or Building used for industrial purposes by way of compulsory acquisition, which is used by the assessee for industrial purposes for at least 24 months.
• Exemption Applicability: Exemption can be claimed if an assessee uses the amount of capital gain to purchase any land or building or construct any building within 3 years from the date of receipt of compensation for shifting or reestablishing the industrial undertaking.
• Exemption Amount: Cost of new land or building or Amount of Capital Gain, whichever is lower.
• Lock-in period: 3 years.
• Capital Gain Account Scheme (CGAS): If an assessee fails to use full or part of the amount for the purchase of new industrial land or building before the due date, such amount shall be deposited in the Capital Gains Deposit Account Scheme (CGAS) before the due date.

4. Exemption on Short-Term Capital Gain arising on transfer of industrial undertaking from an urban area to a rural area (Section 54G)

• Applicable for: All Assessee
• Capital Asset Covered: Transfer of machinery, plant, building, or land or any right in any building and land used for an industrial undertaking purpose situated in an urban area to a rural area.
• Exemption Applicability: Exemption can be claimed if within a period of 1 year before or 3 years after the date of transfer, the assessee acquires new machinery, plant, building, or land or construct a new building for business purpose in the same area to which the undertaking is shifting or incurs any expense on shifting or transferring the establishment of undertakings to such area.
• Exemption Amount: Cost of new assets, including any expenses or Amount of Capital Gain, whichever is lower.
• Lock-in period: 3 years
• Capital Gain Account Scheme (CGAS): If an assessee fails to use full or part of the amount for investment in new assets before the due date, such amount shall be deposited in the Capital Gains Deposit Account Scheme (CGAS) before the due date.

5. Exemption on Short-Term Capital Gain arising on transfer of industrial undertaking from an urban area to Special Economic Zone (SEZ) (Section 54GA)

• Applicable for: All Assessee
• Capital Asset Covered: Transfer of machinery, plant, building, or land or any right in any building and land used for an industrial undertaking purpose situated in an urban area to Special Economic Zone (SEZ).
• Exemption Applicability: Exemption can be claimed if within a period of 1 year before or 3 years after the date of transfer, the assessee acquires new machinery, plant, building, or land or construct a new building for business purpose in the SEZ to which the undertaking is shifting or incurs any expense on shifting or transferring the establishment of undertakings to SEZ.
• Exemption Amount: Cost of new assets including any expenses or Amount of Capital Gain, whichever is lower.
• Lock-in period: 3 years
• Capital Gain Account Scheme (CGAS): If an assessee fails to use full or part of the amount for investment in new assets before the due date, such amount shall be deposited in the Capital Gains Deposit Account Scheme (CGAS) before the due date.