Section 80 Income Tax Act 2025: When Is Fair Market Value Used for Capital Gains?

Section 80 provides a valuation rule where the consideration for transferring a capital asset cannot be ascertained or determined. In that situation, the asset's fair market value on the date of transfer is treated as the full value of consideration for capital gains computation.

Updated: 10 November 2026 | Income-tax Act, 2025 | Capital gains

Key distinction: Section 80 of the Income-tax Act, 2025 corresponds to Section 50D of the Income-tax Act, 1961. It is not the loss-return provision numbered Section 80 in the 1961 Act.

What does Section 80 provide?

Where consideration received or accruing on transfer of a capital asset is not ascertainable or cannot be determined, the fair market value of that asset on the date of transfer is deemed to be the full value of consideration for computing income under the head "Capital gains".

This is a statutory substitution of the consideration figure. It does not, by itself, determine the cost of acquisition, the holding period, the applicable tax rate or the availability of any exemption.

When does Section 80 apply?

There must be a transfer of a capital asset relevant to capital gains taxation.
The consideration received or accruing as a result of that transfer must be unascertainable or incapable of determination.
The fair market value must be established as of the transfer date.
That value is then used as the full value of consideration in the capital gains calculation, subject to other applicable provisions.

Important: A transaction involving non-cash consideration does not automatically attract Section 80. The question is whether the value of consideration can actually be ascertained or determined. A low agreed price alone is not the test under this section.

Relevant statutory concepts

Capital asset: Property or rights falling within the statutory definition of capital asset, subject to the exclusions and qualifications in the Act.

Transfer: A transaction treated as a transfer under the capital gains provisions, including relevant forms of sale, exchange or relinquishment, subject to statutory exceptions.

Fair market value (FMV): The value of the asset determined under the applicable statutory definition and valuation rules. The method depends on the type of asset and the governing provisions.

Full value of consideration: The amount used as the starting point for capital gains computation; under Section 80, FMV replaces an amount that cannot be ascertained or determined.

These are explanatory summaries. For precise statutory definitions and valuation methodology, consult the Act and applicable Income-tax Rules.

How is capital gain calculated? An illustration

Assume a taxable capital asset is transferred under an arrangement in which the consideration cannot be determined. Its supportable fair market value on the transfer date is Rs. 18,00,000. For illustration only, the allowable cost of acquisition is Rs. 10,00,000 and qualifying transfer expenditure is Rs. 50,000.

Particulars	Amount
Deemed full value of consideration (FMV)	Rs. 18,00,000
Less: allowable cost	Rs. 10,00,000
Less: eligible transfer expenditure	Rs. 50,000
Illustrative capital gain	Rs. 7,50,000

The example assumes all stated deductions are permissible. Actual liability depends on asset classification, holding period, applicable computation provisions, exemptions and tax rates.

How does Section 80 differ from other valuation provisions?

Section 78: Special rules concerning stamp duty value in specified immovable property transfers. Section 79: Special full-value-of-consideration rule for transfer of shares other than quoted shares. Section 80: General deeming rule triggered when the consideration for a capital asset transfer cannot be ascertained or determined.

Determine which specific provision governs the transaction before adopting a valuation. Section 80 should not be applied merely because the declared consideration differs from FMV.

What evidence should taxpayers preserve?

Keep the transfer agreement, correspondence describing the consideration, valuation reports and supporting data, records identifying the transfer date, and documents supporting acquisition cost and transfer expenses. An appropriate valuation may require specialist evidence.

Frequently asked questions

Is fair market value used for every capital asset transfer?

No. Section 80 applies when consideration is not ascertainable or cannot be determined. Other transfers ordinarily follow the relevant computation and deeming provisions.

Which date is relevant for determining FMV?

The date of transfer, as expressly specified in Section 80.

Does Section 80 itself impose a separate tax rate?

No. It provides a deemed consideration figure for capital gains computation, not an independent tax rate.

What is the corresponding provision under the 1961 Act?

Section 50D of the Income-tax Act, 1961 addresses the same situation.

Does the section apply simply because property was sold below market value?

No. A lower stated price is not, by itself, sufficient. Separate special valuation provisions may be relevant depending on the asset and transaction.

Official legislation and further reading

Official Section 80 text Income-tax Act 2025 resources

Legal note: This article explains the general statutory position and does not replace transaction-specific advice or an examination of the applicable rules and amendments.