Extension of time for acquiring new asset or depositing or investing amount of capital gains
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Irrespective of anything contained in sections 82, 83, 84, 85, and 86,––
- (a) if the transfer of the original asset mentioned in those sections is by way of compulsory acquisition under any law; and
- (b) if the compensation awarded for such acquisition is not received by the assessee on the date of transfer, then, the period available to him under those sections for acquisition of the new asset or investment or deposit of capital gain in specified bank or institution shall be reckoned from the date of receipt of compensation.
FAQs on Section 89 of Income Tax Act 2025
What is Section 89 of the Income Tax Act, 2025 about?
Section 89 deals with the extension of time for acquiring a new asset or depositing or investing the amount of capital gains in specific cases.
From when is Section 89 effective?
Section 89 is effective from 1st April, 2026.
Does Section 89 override other sections?
Yes, Section 89 applies irrespective of anything contained in sections 82, 83, 84, 85, and 86.
When does Section 89 apply?
Section 89 applies when the original asset is transferred by way of compulsory acquisition under any law.
What if the compensation for the compulsory acquisition is not received on the date of transfer?
If the compensation is not received on the date of transfer, Section 89 provides relief by extending the time period.
How is the extended period calculated under Section 89?
The period available for acquisition of a new asset, or for investment or deposit of the capital gains, is reckoned from the date of receipt of compensation.
Which types of actions are covered under the extended period?
Acquiring a new asset, investing the capital gains, or depositing the amount in a specified bank or institution.
Is this extension automatic under Section 89?
Yes, the extension applies automatically when the specified conditions are satisfied.
Does Section 89 mention specific banks or institutions for depositing capital gains?
It refers generally to specified banks or institutions as per the relevant sections, without naming them specifically in Section 89.
Which sections are originally related to the acquisition, investment, or deposit of capital gains?
Sections 82, 83, 84, 85, and 86 are the relevant sections.
Is the extension under Section 89 applicable if the transfer is voluntary?
No, Section 89 applies only in cases of compulsory acquisition.
Is the extension of time under Section 89 indefinite?
No, it is limited; it starts from the date of receipt of compensation and follows the timelines prescribed in sections 82 to 86.
What is meant by ‘compulsory acquisition under any law’?
It means acquisition of property by a governmental or authorized authority where the owner is legally bound to transfer it, not voluntarily.
Can an assessee claim the benefit of Section 89 multiple times for different assets?
Yes, provided each transfer satisfies the conditions under Section 89.
Does Section 89 apply to partial compensation received on different dates?
Section 89 specifically addresses the date of receipt of compensation, but if compensation is received in parts, interpretation may depend on the rules prescribed under this Act or clarifications by the authorities.
Is there any requirement to file a declaration to avail benefits under Section 89?
Section 89 itself does not specify any filing requirement; procedural compliance may be governed by rules made under the Act.
Does the extension affect the computation of capital gains?
No, Section 89 only affects the time limit for acquisition, investment, or deposit, not the computation of capital gains.
What happens if the assessee fails to acquire, invest, or deposit within the extended time?
In such cases, the capital gains may become taxable according to the provisions of the relevant sections (82–86).
Can Section 89 be invoked for acquisitions under agreements rather than by law?
No, Section 89 is specifically for compulsory acquisition under any law, not for contractual agreements.
Is there any example provided in the Act for understanding Section 89?
No, Section 89 does not include any illustrative examples within its text.
