Old Sections 45 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The capital-gains code of the 1961 Act — charge (45), meaning of transfer (2(47)), computation (48), cost of acquisition/improvement (49, 55), and the reinvestment exemptions (54, 54F, 54EC) — carries into the "Capital gains" head of the Income-tax Act 2025. Holding periods, exemptions and the FMV-as-on-1 April 2001 base are preserved.
Overview
Capital gains tax the profit on transfer of a capital asset. Sections 45 to 55A of the 1961 Act defined the charge, what counts as a transfer, how to compute the gain, how to fix cost of acquisition, and the exemptions for reinvestment. The Income-tax Act 2025 consolidates these into a single capital-gains head, keeping the computation and exemptions intact.
What the Old Act Said
Section 45 charged capital gains in the year of transfer, with special sub-sections for insurance receipts, conversion of stock, dissolution and joint development agreements. Section 2(47) defined "transfer" broadly (sale, exchange, relinquishment, extinguishment). Section 48 computed gain as full value of consideration less cost of acquisition, cost of improvement and transfer expenses, with indexation for long-term assets. Sections 49 and 55 fixed cost in special cases (inheritance, gift, the FMV-as-on-1 April 2001 option) and defined "cost of improvement". Sections 54, 54B, 54D, 54EC, 54F gave exemptions for reinvestment in a house, agricultural land, bonds, etc. Section 55A allowed reference to a Valuation Officer.
What the New Act 2025 Changes
The 2025 Act re-numbers this into a single capital-gains head while preserving the mechanics. The charge on transfer, the broad definition of transfer, and the computation (consideration minus cost, improvement and expenses) continue. The special cost rules — previous owner's cost and holding period for inherited/gifted assets, and the option to substitute fair market value as on 1 April 2001 — are retained. The reinvestment exemptions (residential house rollover, specified bonds within six months capped at ₹50 lakh, and the ₹10 crore reinvestment ceiling on the house exemptions) are carried forward. Long-term/short-term classification and the applicable rates follow the rate schedule in force; where indexation policy has shifted for particular assets, check the applicable treatment for your asset class.
Old → New Mapping
| Provision (1961 Act) | What it did | Position under Income-tax Act 2025 |
|---|---|---|
| Section 45 | Charge of capital gains in year of transfer | Retained as the charging section, with special-case sub-rules preserved |
| Section 2(47) | Definition of "transfer" | Reproduced in the definitions |
| Section 48 | Computation; indexation for long-term assets | Retained; computation preserved, indexation as applicable to the asset |
| Sections 49 / 55 | Cost in special cases; FMV as on 1 Apr 2001; cost of improvement | Retained, including the 1 April 2001 base option |
| Section 54 / 54F | Reinvestment in a residential house | Retained with the ₹10 crore reinvestment cap |
| Section 54EC | Specified bonds within 6 months, ₹50 lakh cap | Retained |
| Section 54B / 54D | Agricultural land; compulsory acquisition of industrial undertaking | Carried forward as reinvestment exemptions |
| Section 55A | Reference to Valuation Officer | Retained |
Practical Impact / Examples
Suppose a taxpayer sells a residential flat held since 2010 for ₹1.2 crore and reinvests ₹90 lakh in another house. Under the 2025 Act the old Section 54 rollover continues, exempting the reinvested portion, subject to the ₹10 crore ceiling. If instead the taxpayer invests ₹50 lakh in specified bonds within six months, the 54EC-equivalent exemption applies up to ₹50 lakh. For an inherited plot sold this year, the cost is the previous owner's cost (or FMV as on 1 April 2001), and the previous owner's holding period counts towards long-term status — unchanged.
Transition Tips
- Retain purchase deeds, improvement bills and, for old assets, a 1 April 2001 valuation report.
- Track the reinvestment windows (2 years to buy / 3 years to construct; 6 months for bonds) — deadlines are unchanged.
- Use the Capital Gains Account Scheme if you cannot reinvest before the return due date, as before.
- Confirm the applicable rate and indexation position for your specific asset class under the current schedule.