Section 68 - Capital gains on distribution of assets by companies in liquidation
On liquidation, distributions attributable to company assets can produce shareholder capital gains after the statutory adjustments; the company’s own distribution is governed separately.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Section 68 is presented using the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The general commencement date is 1 April 2026. Earlier years and saved proceedings may remain governed by the Income-tax Act, 1961 and the repeal/savings framework.
2-minute professional decode
On liquidation, distributions attributable to company assets can produce shareholder capital gains after the statutory adjustments; the company’s own distribution is governed separately.
Who should test this section?
Section 68 matters to investors, property owners, promoters, companies, firms and advisers where the transaction involves capital gains on distribution of assets by companies in liquidation; the charge, computation and relief steps should be separated.
Evidence to retain
The section 68 file should preserve acquisition and transfer instruments, valuation or stamp records, payment evidence, holding-period material and every document that supports the treatment of capital gains on distribution of assets by companies in liquidation.
1961 Act bridge
| Legacy provision | Legacy heading | Mapping |
|---|---|---|
| 46 | Capital gains on distribution of assets by companies in liquidation. | Renumbered / mapped |
The bridge is a research aid. Legacy case law carries over only after the current wording and transition rules are matched.
Rules and forms linked to this section
No provision-specific Rule was independently mapped from the current Rules register for this section. That does not mean the wider Rules are irrelevant.
Worked application
Prepare a hypothetical transaction involving capital gains on distribution of assets by companies in liquidation. Identify the person, tax year, trigger, evidence and connected provision first; then apply section 68 step-by-step and document why each statutory condition is or is not met.
Common mistake
For section 68, do not jump from sale proceeds to a capital-gain number: first identify the transfer/charging event, then consideration, cost, timing and any exemption or rollover condition relevant to capital gains on distribution of assets by companies in liquidation.
Compliance approach
Identify the statutory trigger for section 68, lock the relevant tax year, reconcile the facts to the operative sub-section, preserve the evidence trail and separately test every linked Rule, Form, Schedule and exception before finalising the return position.
Numeric / timing checkpoints in the operative text
- No standalone numeric checkpoint should be inferred from the heading; read the operative text.
Related provisions
- Section 67
- Section 2
- Section 72
- Section 69
Current statutory text
Primary-source trail
- Consolidated Income-tax Act, 2025 (as amended by Finance Act, 2026) (official external source)
- Income Tax Department - Act/Rules/Forms hub (official external source)
- CBDT commencement material - Act operative from 1 April 2026 (official external source)
Source status: full Section 68 statutory text in the local source corpus; reconciled to the current consolidated Act control on 8 October 2026.