New Income Tax Bill 2025 : Exemption against Long-term Capital “Gain” & not against Long-Term Capital “Asset”
While over viewing the new Income Tax Bill 2025, some section seems that they are same as the old Income Tax Act 1961 but reading the nuances of such sections clarifies the impact of small changes. One such provision is Section 85 of the new Income Tax Bill 2025 regarding Investment in certain bonds for capital gain exemption (section 54EC of the old Act)
The new act specifically provides exemption for long-term capital “gain” whereas previously in section 54EC it was long-term capital “asset”
As per the judgment of the supreme court in the case of CIT v. Dempo Company Ltd (2016), section 54EC was available even for ‘Short-term capital gain’ arising out of the transfer of depreciable asset u/s 50, if such asset is held for more than 36 months (as the asset transferred was long-term capital asset)
Whereas now the assessee can get the benefit of such exemption only in case of Long-term capital gain and not in Short-term capital gain arising out of transfer of depreciable Long-term capital asset from the block of asset, nullifying the judgement of the supreme court.
The copy of the relevant part of the income tax bill is as under:
