Capital Gains Exemption for Charitable Trusts Under Section 11(1A): Full or Partial Use of Net Consideration Explained.
Section 11(1A) of the Income Tax Act addresses the treatment of capital gains for charitable or religious trusts. When a capital asset held by a trust for charitable or religious purposes is transferred, and the net consideration is used to acquire a new capital asset, the capital gain may be exempt. If the entire net consideration is used for the new asset, the whole capital gain is exempt; if only part is used, a proportionate exemption applies. For assets partially held for charitable purposes, the "appropriate fraction" of the capital gain is considered applied for such purposes, with specific calculations based on the utilization of net consideration.
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