Income Tax Act 2025: Section 75 for Tax Year 2026-27

Special provision for cost of acquisition in case of depreciable asset

[Section-75 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

If depreciation has been obtained under section 33(2) for a capital asset in any tax year, the provisions of sections 72 and 73 shall apply subject to the modification that the written down value, as defined in section 41, of the asset, as adjusted, shall be taken as the cost of acquisition of the asset.

FAQs on Section 75 of Income Tax Act 2025

1. What is Section 75 of the Income Tax Act, 2025 about?
Section 75 provides a special rule for determining the cost of acquisition of depreciable assets when depreciation has been claimed under section 33(2).

2. From which date is Section 75 effective?
Section 75 is effective from 1st April, 2026.

3. What happens if depreciation has been claimed on a capital asset under section 33(2)?
If depreciation has been claimed under section 33(2), then the cost of acquisition of the asset is determined as per the written down value (WDV) defined under section 41, as adjusted.

4. Which sections are modified by Section 75?
Sections 72 and 73 are applied with modifications due to Section 75.

5. What is the meaning of ‘written down value’ in this context?
‘Written down value’ refers to the value of the asset after accounting for depreciation, as defined under section 41 of the Act.

6. How is the cost of acquisition calculated under Section 75?
The cost of acquisition is taken as the written down value of the asset after adjustments, not the original purchase price.

7. Does Section 75 apply to all capital assets?
No, Section 75 specifically applies to depreciable capital assets for which depreciation has been obtained under section 33(2).

8. Is the original purchase price considered under Section 75?
No, under Section 75, the cost of acquisition is based on the adjusted written down value, not the original purchase price.

9. What is the significance of adjustment to the written down value under Section 75?
The adjustment ensures that the cost of acquisition reflects the reduced value of the asset after depreciation benefits have been availed.

10. Why is there a need for a special provision like Section 75?
A special provision ensures that taxpayers do not get double benefits — once through depreciation and again through higher cost deduction during capital gains computation.

11. Does Section 75 override the general provisions of Sections 72 and 73?
Yes, to the extent of determining the cost of acquisition for depreciable assets, Section 75 modifies the general provisions.

12. If no depreciation was ever claimed, will Section 75 still apply?
No, Section 75 applies only if depreciation has been actually obtained under section 33(2).

13. What if the asset was partially depreciated and then sold?
In such cases, the cost of acquisition for capital gains will be the adjusted written down value at the time of sale.

14. Does Section 75 affect the computation of short-term or long-term capital gains?
It affects the cost of acquisition used in computing both short-term and long-term capital gains, depending on the holding period of the asset.

15. Is the WDV calculated as per books or as per the Income Tax Act provisions?
The WDV is calculated strictly as per the definitions and rules under the Income Tax Act, not based on the accounting books.

16. How is the ‘adjusted’ WDV determined?
The ‘adjusted’ WDV accounts for all allowable depreciation deductions till the date of transfer.

17. Will Section 75 apply if depreciation was claimed under any other provision, not section 33(2)?
No, Section 75 applies only if depreciation was obtained under section 33(2) specifically.

18. What if there is a revaluation of the asset in the books of account?
For Section 75 purposes, revaluation in the books is ignored; only the WDV as per the Income Tax Act matters.

19. How does Section 75 benefit the Revenue Department?
It prevents taxpayers from claiming excessive deductions by using the higher original cost after already benefiting from depreciation.

20. In case of amalgamation or succession, how will Section 75 be applied?
The successor entity must also take the adjusted WDV as cost of acquisition if depreciation was claimed earlier under section 33(2).