Rule 6: Holding period for specified capital assets
Rule 6 determines the holding period for three specified asset situations and separately classifies amounts attributed to capital assets under section 67(10). It must be read with the relevant asset and transaction provisions of the Act.
Official notified Income-tax Rules, 2026Need advice on Rule 6?
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Bare law
Rule 6 - Method of determination of period of holding of capital assets in certain cases
(1) For the purposes of section 2(101)(c)(D), the period for which such capital asset is held by an assessee, shall be determined in accordance with the provisions of this rule.
(2) For the capital asset mentioned in column B of the Table below, the period for which the capital asset is held by the assessee shall be determined in accordance with column C thereof:
Table Sl.No. (A) Nature of Assets (B) Period of holding (C) 1. Shares or debentures of a company, which becomes the property of the assessee under the circumstances mentioned in section 70(1)(z). The period of holding shall include the period for which the bond, debenture, debenture-stock or deposit certificate, as the case may be, was held by the assessee prior to the conversion. 2. Capital asset declared under the Income Declaration Scheme, 2016 made under the Finance Act, 2016 (28 of 2016). (i) In the case of an immovable property, the period for which such property is held is to be reckoned from the date on which such property is acquired, if the date of acquisition is evidenced by a deed registered with any authority of a State Government; and (ii) in any other case, the period for which such asset is held shall be reckoned from the 1st June, 2016. 3. Capital asset which became the property of the Indian subsidiary company in consequence to conversion of a branch of a foreign company referred to in section 219(1). The period of holding shall include the following: (i) the period for which the asset was held by the said branch of the foreign company; or (ii) the period for which the asset was held by the previous owner, if any, who has acquired the capital asset by a mode of acquisition referred to in section 73(1) [Sl.No.1. C.A] or section 219(1). (3) In case of the amount which is chargeable to income-tax as income of a specified entity under section 67(10) under the head "Capital gains",– (a) the amount or a part of it shall be considered to be from transfer of short-term capital asset, if it is attributed to,– (i) the capital asset which is short-term capital asset at the time of taxation of amount under section 67(10); or (ii) capital asset forming part of block of asset; or (iii) capital asset being self-generated asset and self-generated goodwill as defined in section 67(11); and (b) the amount or a part of it shall be considered to be from transfer of long-term capital asset or assets, if it is attributed to capital asset which is not covered by sub-clause (i) of clause (a) and is long-term capital asset at the time of taxation of amount section 67(10).
Rule breakdown
Match the asset to a table entry
For the conversion covered by section 70(1)(z), include the period for which the relevant bond, debenture, debenture-stock or deposit certificate was held before conversion. Do not extend this entry to every share acquisition without checking the specified transaction.
Check declared assets and supporting deeds
For an asset declared under the Income Declaration Scheme, 2016, immovable property uses its acquisition date where that date is evidenced by the registered deed described in the table. In any other case, the prescribed starting date is 1 June 2016. Keep the declaration and acquisition evidence together.
Trace the foreign-branch conversion history
For the Indian subsidiary’s asset arising on conversion of the foreign-company branch under section 219(1), apply the table’s branch-holding and specified previous-owner limbs. Reconstruct the acquisition chain and the cited mode of acquisition before deciding what period is included.
Classify section 67(10) attribution separately
Sub-rule (3)(a) treats attributed amounts as arising from short-term capital assets for its listed categories: an asset that is short-term at the relevant time, an asset forming part of a block, or the specified self-generated asset or goodwill. Clause (b) addresses its stated long-term category. Do not classify a block asset or self-generated goodwill solely by how long the business has existed.
Separate holding period from the complete tax calculation
After applying the relevant holding-period or classification rule, check the Act’s applicable threshold, computation and rate provisions. Rule 6 is not itself a universal exemption or a single capital-gains rate, and the table does not cover every possible transfer.
Key takeaways
Three table cases
The table addresses specified security conversions, Income Declaration Scheme assets and foreign-branch conversion assets.
Evidence matters
For the specified declared immovable property, the acquisition-date limb requires a deed registered with a State Government authority.
Special classification
Sub-rule (3) separately addresses short-term and long-term attribution for specified-entity income under section 67(10).
Practical checklist
- Match the exact transaction to its table row or subsection (3).
- Retain conversion, acquisition and registered-deed evidence.
- Reconcile section 67(10) attribution with the actual asset category.
Avoid
- Do not assume every conversion restarts the holding period.
- Do not treat all self-generated goodwill as long-term merely because the business is old.
FAQs
Does a specified conversion always restart the holding period?
No. Table row 1 includes the prior holding period of the listed security or deposit instrument in the circumstances cited there.
What date applies to a declared asset under the Income Declaration Scheme?
The table uses the evidenced acquisition date for the described immovable property and 1 June 2016 in any other case.
Does Rule 6 itself fix the tax rate?
No. It deals with the specified holding-period and capital-asset classification questions; the applicable tax rate must be checked separately.