Capital gain on the transfer of long-term capital assets is not to be charged in the case of investment in specified securities

If a long-term capital asset was transferred before the first day of April 2000 and there was a capital gain (the capital asset so transported being hereafter in this section referred to as the original asset) and the assessee has invested the entirety or any portion of the net consideration in any of the bonds, debentures, shares of a public company, or units of any mutual fund mentioned in clause (23D) of section 10 at any time within six months of the date of such transfer, as specified by the Board in this regard by notification in the Official Gazette (such assets hereafter in this section referred to as the specified securities), then, the following provisions of this subsection must be followed in order for the capital gain to be handled properly, like:-

(a) The entirety of such capital appreciation shall not be subject to section 45 taxation if the cost of the selected securities is equal to or more than the net consideration with respect to the original asset;

(b) The amount of the capital gain that bears to the total capital gain the very same percentage as the cost of incorporation of the specified equities bears to the net consideration shall not be charged under section 45 if the cost of the stipulated securities is less than the net evaluation in respect of the original asset.

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The amount of capital gain resulting from the transport of the original investment not charged under section 45 on the basis of the amount of such specified equities as provided in clause (a) or clause (b) of the first subsection shall be deemed to be the revenue chargeable under the head "Capital gains" relating to long-term equity a when the specified financial assets are transferred or incorporated into money at any time inside a period of three years from the date of their acquisition.

When the original asset is reassigned and the assessee invests all or a portion of the net consideration in relation to the original asset in any stipulated securities and the assessee takes any loan or advance using the security of such stipulated securities, he is considered to have converted (other than by transfer) such specified investments into money on the date that such loan or advance is taken.

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