§ 68
Chapter IV — Computation Of Total Income
Income-tax Act, 1961 (43 of 1961). Capital gains on distribution of assets by companies in liquidation
Income-tax Act, 2025
When a company is liquidated, the distribution of its assets to shareholders is not considered a transfer. Shareholders who receive money or assets will be charged income tax under 'Capital gains'. The taxable amount is the market value of the assets received, minus any amount assessed as dividend.
📜 Official text of the section +
68. (1) Irrespective of anything contained in section 67, where the assets of a
company are distributed to its shareholders on its liquidation, such distribu-
tion shall not be regarded as a transfer by the company for the purposes of the said
section.
(2) If a shareholder, on the liquidation of a company, receives any money or other
assets from the company, then,—
( a) such shareholder shall be chargeable to income-tax under the head
“Capital gains”, in respect of the money so received or the market value
of the other assets on the date of distribution, as reduced by the amount
assessed as dividend within the meaning of section 2(40)(c); and
( b) the sum so arrived at shall be deemed to be the full value of the consid-
eration for the purposes of section 72.
Capital gains on purchase by company of its own shares or other specified
securities.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.