Mode of computation and deductions
48. (1) The income chargeable under the head "Capital gains" shall be computed,—
( a) by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :—
( i) expenditure incurred wholly and exclusively in connection with such transfer;
( ii) the cost of acquisition of the asset and the cost of any improvement thereto :
22 [ 22aProvided that in the case of an assessee, who is a non-resident Indian, capital gains arising from the transfer of a capital asset being shares in or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every re-investment thereafter in, and sale of, shares in, or debentures of, an Indian company.
Explanation : For the purposes of this clause,—
( i) "non-resident Indian" shall have the same meaning as in clause (e) of section 115C;
( ii) "foreign currency" and "Indian currency" shall have the meanings respectively assigned to them in section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973);
( iii) the conversion of Indian currency into foreign currency and the reconversion of foreign currency into Indian currency shall be at the rate of exchange prescribed in this behalf;]
( b) where the capital gain arises from the transfer of a long-term capital asset (hereafter in this section referred to, respectively, as long-term capital gain and long-term capital asset) by making the further deductions specified in sub-section (2).
(2) The deductions referred to in clause (b) of sub-section (1) are the following, namely :—
( a) where the amount of long-term capital gain arrived at after making the deductions under clause (a) of sub-section (1) does not exceed 22b[ ten] thousand rupees, the whole of such amount;
( i) in respect of long-term capital gain so arrived at relating to capital assets, being buildings or lands or any rights in buildings or lands or gold, bullion or jewellery,—
( A) in the case of a company, ten per cent of the amount of such gain in excess of 22b [ten ] thousand rupees ;
( B) in the case of any other assessee, fifty per cent of the amount of such gain in excess of 22b [ten] thousand rupees ;
23 [(ia) in respect of long-term capital gain so arrived at relating to equity shares of venture capital undertakings,—
( A) in the case of a company, other than venture capital company, thirty per cent of the amount of such gain in excess of 22b[ ten] thousand rupees;
( B) in the case of venture capital company, sixty per cent of the amount of such gain in excess of 22b[ ten] thousand rupees;
( C) in any other case, sixty per cent of the amount of such gain in excess of 22b [ten ] thousand rupees;]
( ii) in respect of long-term capital gain so arrived at relating to 24[capital assets other than capital assets referred to in sub-clauses (i) and (ia)],—
( A) in the case of a company, thirty per cent of the amount of such gain in excess of 24a[ ten] thousand rupees;
( B) in any other case, sixty per cent of the amount of such gain in excess of 24a [ten ] thousand rupees:
Provided that where the long-term capital gain relates to both categories of capital assets referred to in sub-clauses (i) and (ii), the deduction of 24a [ten ] thousand rupees shall be allowed in the following order, namely :—
( 1) the deduction shall first be allowed against long-term capital gain relating to the assets mentioned in sub-clause (i);
( 2) thereafter, the balance, if any, of the said 24a[ ten] thousand rupees shall be allowed as deduction against long-term capital gain relating to the assets mentioned in sub-clause (ii),
and the provisions of sub-clause (ii) shall apply as if references to 24a[ ten] thousand rupees therein were references to the amount of deduction allowed in accordance with clauses (1) and ( 2) of this proviso :
Provided further that, in relation to the amount referred to in clause (b) of sub-section (5) of section 45, the initial deduction of 24a[ ten] thousand rupees under clause (a) of this sub-section shall be reduced by the deduction already allowed under clause (a ) of section 80T in the assessment for the assessment year commencing on the 1st day of April, 1987, or any earlier assessment year or, as the case may be, by the deduction allowed under clause (a) of this sub-section in relation to the amount of compensation or consideration referred to in clause (a) of sub-section (5) of section 45 and references to 24a [ten ] thousand rupees in clauses (a) and (b) of this sub-section shall be construed as references to such reduced amount, if any.
( a) "venture capital company" means such company as is engaged in providing finance to venture capital undertakings mainly by way of acquiring equity shares of such undertakings or, if the circumstances so require, by way of advancing loans to such undertakings, and is approved by the Central Government in this behalf;
( b) "venture capital undertaking" means such company as the prescribed authority may, having regard to the following factors, approve for the purposes of sub-clause ( ia) of clause (b) of sub-section (2), namely :—
( 1) the total investment in the company does not exceed ten crore rupees or such other higher amount as may be prescribed;
( 2) the company does not have adequate financial resources to undertake projects for which it is otherwise professionally or technically equipped; and
( 3) the company seeks to employ any technology which will result in significant improvement over the existing technology in India in any field and the investment in such technology involves high risk.]
(3) The deductions specified in sub-section (2) shall be made also for the purposes of computing any loss under the head "Capital gains" in so far as it pertains to any long-term capital asset and, for this purpose, any reference in that sub-section to the amount of long-term capital gain arrived at after making the deductions under clause (a) of sub-section (1) shall be construed as reference to the amount of loss arrived at after making the said deductions.]