Section 45 of Income Tax Act –

Any profits or gains arising from transfer of capital asset effected in the previous year shall be chargeable to Income Tax under the head ‘Income from Capital Gains” and shall be deemed to be the income of the previous year in which transfer took place.

For the purpose of Section 45, following transactions are not regarded as transfer-

  1. Distribution of asset in kind by a company to its shareholders at the time of liquidation.
  2. Distribution of capital asset on total or partial partition of Hindu Undivided Family (HUF).
  3. Transfer of capital asset under a gift or will or an irrecoverable trust.
  4. Transfer of capital asset by a company to its wholly owned subsidiary.
  5. Transfer of capital asset by a wholly owned subsidiary to its holding company.
  6. Transfer of capital asset in the scheme of amalgamation.
  7. Transfer of shares in an Indian company held by a foreign company under the scheme of amalgamation of two foreign companies.
  8. Transfer of capital asset in the scheme of amalgamation of banking company with a Banking Institution.
  9. Transfer a capital asset by a demerged company to resulting company.
  10. Transfer of shares held in an Indian company by a demerged foreign company to resulting foreign company.
  11. Any transfer of capital asset in a business reorganization, by the predecessor co-operative bank to the successor co-operative bank.
  12. Any transfer by a shareholder, in a business reorganization, of a capital asset being shares held by him in the predecessor co-operative bank, if the transfer is made in consideration of allotment to him of any shares in the successor co-operative bank.
  13. Transfer or issue of shares by the resulting company, in a scheme of demerger to the shareholders of demerged company.
  14. Allotment of shares in amalgamated company in lieu of shares of amalgamating company.
  15. Transfer of a capital asset (being foreign currency convertible bond or Global Depository Receipts (GDR)) by a non-resident to another non-resident.
  16. Any transfer, made outside India, of a capital asset being rupee denominated bond of an Indian company issued outside India, by a non-resident to another non-resident.
  17. Any transfer of a capital asset, being a Government Security carrying a periodic payment of interest, made outside India through an intermediary dealing in settlement of securities, by a non-resident to another non-resident.
  18. Transfer of capital asset made by a non-resident on a recognized stock exchange located in international financial services centre and where the consideration is paid/ payable in foreign currency.
  19. Transfer by an individual of Sovereign Gold Bond (Issued by RBI under the sovereign Gold Bond Scheme, 2015) by way of redemption.
  20. Transfer of agriculture and in India before 01/03/1970.
  21. Transfer of capital asset (being work of art, manuscript, painting etc) to the Government/University/ national museum, etc.
  22. Transfer by way on conversion of bonds or debentures into shares.
  23. Transfer by way of conversion of bonds into shares or debentures of any company.
  24. Transfer by way of preference shares of a company into equity shares of that company.
  25. Transfer by way of exchange of capital asset being membership of a recognized stock exchange for shares of a company.
  26. Transfer of land by a sick industrial unit which is managed by its workers’ co-operative.
  27. Transfer of capital asset by a firm to a company in case of conversion of firm into a company.
  28. Transfer of capital asset, being a membership right held by a member of a recognized stock exchange in India.
  29. Transfer of share by a private company/unlisted public company to a Limited Liability Partnership (LLP), or any transfer of shares held in the company by a shareholder, in case of conversion of company into LLP.
  30. Transfer of capital asset to a company in the case of conversion of proprietary concern into company.
  31. Transfer involved in the scheme of lending of securities.
  32. Transfer of capital asset in a transaction of reverse mortgage made under the scheme notified by the Government.