Notification No. 18/2016][F.No.142/1/2016-TPL/SO 1146(E)

[To BE Published in the Gazette of INDIA, Extraordinary, Part II, section 3, Sub-section (ii)]

What this is

Notification No. 18/2016][F.No.142/1/2016-TPL/SO 1146(E) was published on 17 March 2016. Its subject is [To BE Published in the Gazette of INDIA, Extraordinary, Part II, section 3, Sub-section (ii)].

This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.

What it does

Made under section 2 read with section 295 of the Income-tax Act, 1961, the Income-tax (6th Amendment) Rules, 2016 insert a new rule 8AA after rule 8A of the Income-tax Rules, 1962, on the method of determining the period of holding of capital assets in certain cases. Sub-rule (1) makes the rule govern the period of holding of any capital asset other than those mentioned in clause (i) of Explanation 1 to clause (42A) of section 2. Sub-rule (2) provides that where a capital asset being a share or debenture of a company becomes the property of the assessee in the circumstances mentioned in clause (x) of section 47 — conversion of a bond, debenture, debenture-stock or deposit certificate — the period for which the bond, debenture, debenture-stock or deposit certificate was held before the conversion is to be included in the period of holding.

Who it reaches

holders of convertible bonds, debentures, debenture-stock and deposit certificates
persons computing capital gains on the sale of shares or debentures received on such conversion
chartered accountants determining whether a gain is long-term or short-term
assessing officers testing the period of holding

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.2	s.2, s.346, s.355
s.3	s.3
s.47	s.2, s.70
s.295	s.533

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
Notification

New Delhi, the 17th March, 2016
S.O. 1146 (E).- In exercise of the powers conferred by section 2, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (6th Amendment) Rules, 2016.
(2) They shall come into force from the 1st day of April, 2016.

2. In the Income-tax Rules, 1962, after rule 8A, the following rule shall be inserted, namely:-

"8 AA. Method of determination of period of holding of capital assets in certain cases.-
(1) The period for which any capital asset, other than the capital assets mentioned in clause (i) of the Explanation 1 to clause (42A) of section 2 of the Act, is held by an assessee, shall be determined in accordance with the provisions of this rule.
(2) In the case of a capital asset, being a share or debenture of a company, which becomes the property of the assessee in the circumstances mentioned in clause (x) of section 47 of the Act, there shall be included 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."

[Notification No. 18/2016][F.No.142/1/2016-TPL]
[Ekta Jain]
Deputy Secretary (Tax Policy & Legislation)

Note:- The principal rules were published vide notification number S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification S.O.No.1101 (E), dated the 15th March, 2016.

What it changes

The rule numbers are the 1962 Rules’ own, as the notification names them. The right-hand column is the department’s own mapping into the Income-tax Rules, 2026, which renumbered nearly everything.

Rule of the 1962 Rules	Now, in the 2026 Rules
Rule 8A	no counterpart recorded
Rule 8AA	rule 6

From when

1 April 2016.

What to watch

The rules come into force from 1 April 2016.
The pre-conversion holding is added only where the asset came in through a transaction within clause (x) of section 47; other conversions are not covered by sub-rule (2).
Assets described in clause (i) of Explanation 1 to section 2(42A) are outside the rule altogether, by sub-rule (1).
The rule bears only on the period of holding; the cost of acquisition is dealt with elsewhere in the Act.

Where you meet it

In the capital gains computation in the return for the year the converted share or debenture is sold, where the character of the gain as long-term or short-term turns on the period of holding.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

A debenture held from 2013 is converted into shares of the same company in a transaction falling within clause (x) of section 47, and the shares are sold shortly afterwards. In reckoning the period of holding of those shares, the years for which the debenture was held before conversion are to be included.

What it names

Rules it names. Rule 8A of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 89/2026-CBDT [F. No. 164/1/2026-ITA-1] / SO 3936(E) — Ministry of Finance 17 July 2026
Notification No. 75/2026 [F. No. 275/18/2026-IT(B)] / SO 3610(E) : TDS Exemption on Ship Lease Payments to IFSC Units — 4 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 3 July 2026
Notification No. 74/2026 [F. No. 275/16/2026-IT(B)] / SO 3609(E) : TDS Exemption on Aircraft Lease Payments to IFSC Units — 4 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 3 July 2026
Notification No. 65/2025 [F. No. 300196/4/2019-ITA-I] / S.O. 2739(E) — Ministry of Finance 19 June 2025
Notification No. 56 /2025 [F.No.300164/4/2024-ITA-1] / SO 2576(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 12 June 2025
Notification No. 52/2025 [F. No. 300164/5/2024-ITA-1] / SO 2447(E) — Ministry of Finance 30 May 2025

← Notification No.19/2016][F.No.142/28/2012-(SO)TPL] / SO 1155(E) · Notification No. 15 /2016 [F.No.196/6/2015-ITA-I] / SO 1139(E) →

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.