Capital gains for shifting of industrial undertaking from urban areas [Section 54G] under Exemption of capital gains :

Eligible assessees: Any assessee

Conditions to be fulfilled

•  There should be a shifting of the industrial undertaking from an urban area to any other
  area.
•  There should be a transfer of machinery, plant, building or land or any right in building or
  land used for the business of an industrial undertaking situated in an urban area.
•  Such transfer should be in the course of or in consequence of shifting the industrial
  undertaking from an urban area to any other area.
•  The capital gain (short-term or long-term) should be utilized for any of the following
  purposes within 1 year before or 3 years after the date of transfer –
•  purchase of new plant and machinery
•  acquisition of building or land or construction of building
•  expenses on shifting of the industrial undertaking from the urban area to the other
  area
•  such other expenditure as the Central Government may specify

Quantum of exemption

•  If cost of new assets plus expenses incurred for the specified purpose ≥ Capital gains,
  entire capital gains (short-term or long-term) is exempt.
•  If cost of new assets plus expenses incurred for the specified purpose < Capital gains,
  capital gains (short-term or long-term) to the extent of such cost and expenses is exempt.

Consequences if the new asset is transferred within a period of 3 years

•  If the new asset is transferred within a period of 3 years of its purchase or construction, then the capital gain, which was exempt earlier under section 54G would be deducted from the cost of acquisition of the new asset for the purpose of computation of short term capital gains in respect of the transfer of the new asset.