Keeping track

Finance Bill 2017 contains a number of proposals with regard to the assessability and transfer of capital asset in the nature of an immovable property.  The amendments proposed are applicable for assessment year 2018-19 relevant to the financial year 2017-18 unless otherwise specified.

Some main ones are:  

1A new sub-section (5A) is proposed to be introduced in section 45 of the Income Tax Act so as to provide that in case an assessee being individual or Hindu undivided family, who entered into a joint development agreement for development of a project, the capital gain shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority. It is further proposed to provide that the stamp duty value of transferors share, being land or building or both, in the project on the date of issuing such certificate of completion as increased by any monetary consideration received, if any, shall be deemed to the full value of the consideration received or accruing as a result of the transfer of the capital asset in the nature of land or building or both.  However this provision shall not apply where the assessee transfers his share before the issue of completion certificate.

2It is proposed to be enact a new section 194-IC in the Act so as to provide that in case any monetary consideration is payable under the agreement referred  to in the new sub-section (5A) of section 45 of the Act, income-tax @ 10% shall be deductible from such payment.  This amendment is proposed to be effective from April 1, 2017.

3It is proposed to amend section 55 of the Act so as to provide that the base year for computing fair market value of a capital asset shall be changed from 1.4.81 to 1.4.2001 so as to remove genuine difficulty in computing the amount of capital gain in respect of immovable properties acquired before 1.4.81 on account of the non-availability of relevant information for computing a fair market value of such asset as on 1.4.81.

4It is proposed to amend section 54EC of the Act which provides that the amount of capital gain arising on the transfer of a capital asset shall not be chargeable to tax in case the amount of capital gain is utilized for purchase of bonds issued by National Highway Authority of India and Rural Electrification Corporation Ltd.  It is proposed that investment in any bond redeemable after three years which has been notified by the Central Government shall also be eligible for exemption apart from the bonds referred to hereinabove.