Section 45 of ITA, 1961 : Section 45: Capital Gains

Explanation using Example

Example Scenario for Section 45 of The Income-tax Act, 1961:

Raj owns a residential property that he purchased in 2010 for INR 50 lakhs. In 2023, he decides to sell the property for INR 80 lakhs. The profit of INR 30 lakhs (80 lakhs - 50 lakhs) from the sale is considered a capital gain since the property is a capital asset. According to Section 45(1), this gain is chargeable to income tax under the head "Capital gains" in the financial year 2023-24, which is the year in which the transfer of the property took place.