Section 43CA of Income Tax Act for AY 2023-24

Section 43CA of Income Tax Act amended by Finance Act 2022. Full value of consideration for transfer of assets other than capital asset.

Amended and updated notes on section 43CA of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to special provision for full value of consideration for transfer of assets other than capital assets in certain cases.

Chapter IV (Sections 14 to 59) of the Income Tax Act 1961 deals with the provisions related to computation of total income. Section 43CA of IT Act 1961-2023 provides for special provision for full value of consideration for transfer of assets other than capital assets in certain cases.

Recently, we have discussed in detail section 43C (special provision for computation of cost of acquisition of certain assets) of IT Act 1961. Today, we learn the provisions of section 43CA of Income-tax Act 1961. The amended provision of section 43CA is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 43CA of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Section-43CA: Special provision for full value of consideration for transfer of assets other than capital assets in certain cases

Section 43CA(1) of Income Tax Act

Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer:

Provided that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration.

[First proviso of sub-section (1) of section 43CA shall be amended. The Word “ten” shall be substituted for “five” w.e.f. 01.04.0221 by the Finance Act 2020]

Provided further that in case of transfer of an asset, being a residential unit, the provisions of this proviso shall have the effect as if for the words “one hundred and ten per cent.”, the words “one hundred and twenty per cent.” had been substituted, if the following conditions are satisfied, namely:––

  • (i) the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th day of June, 2021;
  • (ii) such transfer is by way of first time allotment of the residential unit to any person; and
  • (iii) the consideration received or accruing as a result of such transfer does not exceed two crore rupees.

[Second proviso of sub-section(1) of section 43CA has been newly inserted w.e.f. 1st April, 2021 by the Finance Act 2021]

Section 43CA(2) of Income Tax Act

The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1).

Section 43CA(3) of Income Tax Act

Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement.

Section 43CA(4) of Income Tax Act

The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed on or before the date of agreement for transfer of the asset.

Explanation: For the purposes of this section, “residential unit” means an independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.

[Second proviso of sub-section(1) of section 43CA has been newly inserted w.e.f. 1st April, 2021 by the Finance Act 2021]


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