Amendment of section 54GB.
32. In section 54GB of the Income-tax Act, with effect from the 1st day of April, 2017,-
(a) after sub-section (5), the following proviso shall be inserted, namely:-
“Provided that in case of an investment in eligible start-up, the provisions of this sub-section shall have the effect as if for the figures, letters and words “31st day of March, 2017”, the figures, letters and words “31st day of March, 2019” had been substituted;”;
(b) in sub-section (6),-
(i) in clause (b),-
(A) in sub-clause (ii), after the words “an article or a thing”, the words “or in an eligible business” shall be inserted;
(B) in sub-clause (iv), after the words and figures “Micro, Small and Medium Enterprises Act, 2006 (27 of 2006)”, the words “or is an eligible start-up” shall be inserted;
(ii) after clause (b), the following clause shall be inserted, namely:-
‘(ba) “eligible start-up” and “eligible business” shall have the meanings respectively assigned to them in Explanation below sub-section (4) of section 80-IAC.’;
(iii) after clause (d), the following proviso shall be inserted, namely:-
“Provided that in the case of an eligible start-up, being a technology driven start-up so certified by the Inter-Ministerial Board of Certification notified by the Central Government in the Official Gazette, the new asset shall include computers or computer software.”.
Notes on Clauses:
Clause 32 of the Bill seeks to amend section 54GB in the Income tax relating to Capital gain on transfer of residential property not to be charged in certain cases.
The existing provisions of section 54GB provide that capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be a small or medium enterprise under the Micro, Small and Medium Enterprises Act, 2006 subject to other conditions specified therein.
It is proposed to amend section 54GB so as to provide that capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be an eligible start-up subject to other specified conditions.
The existing provision of section 54GB requires that the company should invest the proceeds in the purchase of new asset being new plant and machinery but does not include inter alia, computers or computer software.
It is proposed to amend section 54GB so as to provide that the expression “new asset” includes computers or computer software in case of technology driven start-ups so certified by the Inter- Ministerial Board of Certification notified by the Central Government in the Official Gazette.
These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years.
