Income Tax Act, 2025  ·  Chapter IV — Computation of Total Income  ·  Section 73

Section 73
Cost with reference to certain modes of acquisition

IT Act 2025 Chapter IV Effective 1 April 2026 Old: 147 49
New Provision
Section 73, IT Act 2025
Replaces (IT Act 1961)
147 49
Chapter
Chapter IV — Computation of Total Income
Effective From
1 April 2026
Statutory Text — Section 73

(1) In the case of a capital asset specified in column B of the Table below, the cost of acquisition of the asset shall be deemed to be the cost as mentioned in column C of the said Table.

Table Sl. No. Description of the capital asset Cost of acquisition A B C 1. If the capital asset became the property of The cost for which the the assessee–– previous owner of the (a) under a gift or will; or property acquired it, as (b) by succession, inheritance or increased by the cost of devolution; or any improvement (c) on any distribution of assets on incurred or borne by the the liquidation of a company; or previous owner or the (d) under a transfer to a revocable assessee. or an irrevocable trust; or (e) being a Hindu undivided family, by the mode referred to in section 99(3) after the 31st December, 1969; or (f) under any such transfer as is referred to in section 70(1)(a), (c), (d), (e), (g), (h), (i), (j), (l), (m), (n), (o), (t), (u), (v), (w), (zd), (ze) or (zf). 2. Capital asset, being a share or shares in an The cost of amalgamated company which is an Indian acquisition to him of the company that became the property of the share or the shares in the assessee in consideration of a transfer amalgamating company. referred to in section 70(1)(f). 3. Capital asset being a share or debenture of That part of the cost of a company, which became the property of the debenture, debenture- assessee in consideration of a transfer stock, bond or deposit referred to in section 70(1)(z) or (za). certificate in relation to which such asset is acquired by the assessee. 4. Capital asset, being specified security or Fair market value sweat equity shares, referred to in section taken into account for the 17(1)(d). purposes of the said clause. 5. Capital asset, being rights of a partner The cost of referred to in section 42 of the Limited acquisition to him of the Liability Partnership Act, 2008 (6 of 2009), share or shares in the which became the property of the assessee on company immediately conversion as referred to in section before its conversion. 70(1)(ze). 6. Capital asset, being share or shares of a The price of the said company acquired by a non-resident assessee share or shares on redemption of Global Depository prevailing on any Receipts referred to in section 209(1) recognized stock

CH. IV E.- CAPITAL GAINS [Sec 67-91] Sl. No. Description of the capital asset Cost of acquisition A B C (Table: Sl. No. 2) held by such assessee. exchange on the date on which a request for redemption was made. 7. Capital asset, being a unit of a business The cost of trust, which became the property of the acquisition to him of the assessee in consideration of a transfer as share referred to in the referred to in section 70(1)(zi). said clause. 8. Capital asset, being a unit or units in a The cost of consolidated scheme of a mutual fund, which acquisition to him of the became the property of the assessee in unit or units in the consideration of a transfer referred to in consolidating scheme of section 70(1)(zj). the mutual fund. 9. Capital asset, being equity share of a That part of the cost of company, which became the property of the the preference shares in assessee in consideration of a transfer relation to which such referred to in section 70(1)(zb). asset is acquired. 10. Capital asset, being a unit or units in a The cost of consolidated plan of a mutual fund scheme, acquisition to him of the which became the property of the assessee in unit or units in the consideration of a transfer referred to in consolidating plan of the section 70(1)(zk). scheme of the mutual fund. 11. Capital asset being a unit or units in the Computed as per the segregated portfolio. following formula:–– X = A x B , C where,–– X = cost of acquisition of the unit or units in segregated portfolio; A = cost of acquisition of unit or units in the total portfolio; B = Net Asset Value of the asset transferred to the segregated portfolio; and C = Net Asset Value of the total

Sl. No. Description of the capital asset Cost of acquisition A B C portfolio immediately before segregation of portfolios. 12. Capital asset being original units held by The cost of the unit holder in the main portfolio. acquisition of such original units as reduced by the amount as so arrived at under serial number 11. 13. Capital asset, being shares as referred to in The cost of section 70(1)(zl) which became the property acquisition to it of the of the assessee. interest in the joint venture referred to in the said clause. 14. Shares in the resulting company as a Computed as per the result of demerger. following formula:–– X = A x B , C where,–– X = cost of acquisition of shares in the resulting company; A = cost of acquisition of shares in demerged company; B = net book value of assets transferred in demerger; and C = net worth of demerged company immediately before demerger.

Shahi & Co. — Our Understanding
This section falls under Chapter IV which governs the computation of total income under all five heads: Salaries, House Property, Business & Profession, Capital Gains, and Other Sources.
Practical Note: All income earned by a taxpayer in a tax year must be computed under one of these heads. Proper classification determines the applicable deductions, set-off rules, and tax rates.
Shahi & Co., Chartered Accountants
Need guidance on Section 73?
Our Direct Tax team advises individuals, businesses, and start-ups on all provisions of the Income Tax Act, 2025. We help you navigate the transition from the old Act with zero disruption to your compliance calendar.
Consult Our Tax Team →
← Previous
Section 72: Mode of computation of capital gains
Next →
Section 74: Special provision for computation of capital
← Full IT Act 2025 Index ESOP Taxation Guide TDS under IT Act 2025 NRI Residency Rules
Disclaimer: This is a reproduction of Section 73 of the Income Tax Act, 2025 (No. 30 of 2025) as published in the Official Gazette of India (CG-DL-E-22082025-265620) for informational and reference purposes only. Shahi & Co., Chartered Accountants makes no warranty as to completeness or accuracy. For the official authenticated text refer to egazette.gov.in or incometaxindia.gov.in. This does not constitute legal or tax advice.