Capital Gains: Section-wise Mapping under Income-tax Act, 2025 Explained
Introduction
Capital Gains is one of the most litigated and closely monitored heads of income under Indian tax law. With the enactment of the Income-tax Act, 2025, the government has restructured and renumbered capital gains provisions to improve clarity and reduce interpretational disputes.
Although the core taxation principles remain unchanged, understanding the new section mapping vis-à-vis the Income-tax Act, 1961 is essential for accurate compliance and tax planning.
What are Capital Gains?
Capital Gains arise when a capital asset is transferred for consideration exceeding its cost of acquisition. Capital assets include:
Immovable property (land, building)
Shares and securities
Mutual funds
Jewellery
Business assets
Certain rights and intangible assets
The charge of tax depends on the nature of asset and period of holding.
Types of Capital Gains
Under the Income-tax Act, 2025, capital gains continue to be classified as:
1. Short-Term Capital Gains (STCG)
Gains arising from transfer of assets held for a short-term period.
2. Long-Term Capital Gains (LTCG)
Gains arising from transfer of assets held for a long-term period, generally eligible for:
Indexation (where applicable)
Lower tax rates
Specific exemptions
Section-wise Mapping: Old Act vs New Act
Particulars Income-tax Act, 1961 Income-tax Act, 2025
Charge of Capital Gains Section 45 Re-numbered structured section
Capital Asset Section 2(14) Corresponding definition section
Transfer Section 2(47) Simplified mapped section
Short-term vs Long-term Sections 2(42A), 2(29A) Consolidated provisions
Full Value of Consideration Section 48 Streamlined computation section
Cost of Acquisition Section 55 Re-organised section
Exemptions (54 series) Sections 54, 54F, etc. Grouped exemption provisions
(Only section numbers and placement have changed; substance remains the same.)
Computation of Capital Gains
Capital gains are computed as:
Full Value of Consideration
(–) Cost of Acquisition
(–) Cost of Improvement
(–) Transfer Expenses
The Income-tax Act, 2025 presents this computation in a clearer and more sequential manner.
Exemptions from Capital Gains
The following exemptions continue under the new Act:
Reinvestment in residential house
Investment in specified bonds
Rollover of gains under prescribed conditions
The exemption framework remains intact but is better grouped and easier to locate.
What Has Changed in the Income-tax Act, 2025?
Logical sequencing of capital gains provisions
Reduced cross-referencing
Simplified language for “transfer” and “consideration”
Better clarity in exemption-related provisions
There is no fundamental change in tax rates or chargeability.
Impact on Taxpayers
For individuals, investors, and businesses:
No increase in tax burden
Easier interpretation of capital gains law
Improved compliance and documentation clarity
Smooth transition from the old Act
Tax professionals will benefit from a cleaner section structure during assessments and appeals.
Conclusion
Capital Gains under the Income-tax Act, 2025 continue to follow the same taxation framework as the 1961 Act, but with improved structure and readability. Understanding the new section mapping is essential to ensure accurate computation, exemption claims, and compliance in future filings.
Written by:
Abhishek Gupta
Chartered Accountant
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