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CBDT notifies New Rule 8AC for STCG. New Goodwill rule seems imposing Tax Liabilities on Firm

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CBDT vide Notification dated July 07, 2021 notified a new rules 8AC regarding computation of short-term capital gains (STCG) and written down value (WDV) where depreciation on goodwill has been obtained potentially increasing tax liabilities on firms that have undergone mergers or acquisitions in recent years.

The rule states that where the value of net goodwill removed from the block is in excess of the opening WDV as on April 1, 2020, such excess will now be offered to tax as STCG. Cases where goodwill was the only asset in the block, there won’t be any impact.

Notification

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