Section 74 - Special provision for computation of capital gains in case of depreciable assets
For depreciable blocks, gain or loss is computed under the block mechanism and can be short-term irrespective of the individual asset’s holding period.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Section 74 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
For depreciable blocks, gain or loss is computed under the block mechanism and can be short-term irrespective of the individual asset’s holding period.
Who should test this section?
Section 74 matters to investors, property owners, promoters, companies, firms and advisers where the transaction involves special provision for computation of capital gains in case of depreciable assets; the charge, computation and relief steps should be separated.
Evidence to retain
The section 74 file should preserve acquisition and transfer instruments, valuation or stamp records, payment evidence, holding-period material and every document that supports the treatment of special provision for computation of capital gains in case of depreciable assets.
1961 Act bridge
| Legacy provision | Legacy heading | Mapping |
|---|---|---|
| 50 | Special provision for computation of capital gains in case of depreciable assets. | 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
One machine in a depreciation block is sold. The block computation, not standalone asset profit, determines depreciation and short-term gain or loss.
Common mistake
For section 74, 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 special provision for computation of capital gains in case of depreciable assets.
Compliance approach
Identify the statutory trigger for section 74, 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
- (2) If, during the tax year, the full value of consideration received or accruing for the transfer of one or more assets in a block of assets exceeds the total of the following:— (a) expenditure incurred wholly and exclusively in connection with such transfer;
- (b) the written down value of the block of assets at the start of the tax year;
- and (c) the actual cost of any asset falling within the block of assets acquired during the tax year, such excess shall be deemed to be capital gains arising from the transfer of short- term capital assets.
- (3) If any block of assets ceases to exist for the reason that all the assets in that block are transferred during the tax year, then,— (a) the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the tax year, as increased by the actual cost of any asset...
Related provisions
- Section 2
- Section 72
- Section 73
- Section 75
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 74 statutory text in the local source corpus; reconciled to the current consolidated Act control on 8 October 2026.