has been explained in the Memorandum to the Finance Bill, 2016 that "in order to promote the start-up ecosystem in the country, it is envisaged in 'start-up India Action Plan' to establish a Fund of Funds which intends to raise Rs 2,500 crores annually for four years to finance the start-ups."
II. Provisions of section 54EE proposed to be introduced
These provisions are almost similar to provisions of section 54 of the Act so far as investing long-term capital gain arising from transfer of original asset in long-term specified asset is concerned providing for full exemption or proportionate exemption based on the amount of capital gain invested.
However the investment has to be made within a period of 6 months from the date of transfer of original capital asset and the maximum amount that can be invested is Rs. 50 lakhs whether made in one financial year or in two successive years exactly like the provisions of section 54EC of the Act as they stand today. Like section 54EC of the Act the assessee is debarred from taking any loan or advance on the security of the specified asset and per chance if the assessee takes any such loan and/or advance then he is deemed to have transferred such specified asset on the date on which such loan or advance is taken.
As in section 54/54F of the Act the assessee has to hold the long-term specified asset for a period of 3 years from the date of its acquisition and in the event of such transfer within the stipulated period of 3 years from the date of acquisition he would be liable to pay capital gain tax in that relevant previous year pertaining to the assessment year.
Explanation 2 provides that "long-term specified asset" means a unit or units, issued before the 1st day of April, 2019, of such fund as may be notified by the Central Government in this behalf.'
Section 54EE is proposed to be introduced with effect from 1st April, 2017 and therefore shall be applicable from the assessment year 2017-18.
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