Amendment of section 48
29. In section 48 of the Income-tax Act, for the third proviso, the following provisos shall be substituted with effect from the 1st day of April, 2017,-
“Provided also that nothing contained in the second proviso shall apply to the long-term capital gain arising from the transfer of a long-term capital asset, being a bond or debenture other than-
(a) capital indexed bonds issued by the Government; or
(b) Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015:
Provided also that in case of an assessee being a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purposes of computation of full value of consideration under this section:”.
Notes on Clauses:
Clause 29 of the Bill seeks to amend section 48 of the Income tax Act relating to mode of computation.
The aforesaid section, inter alia, provides that indexation benefit in respect of long-term capital gains as per third proviso is not available to bonds and debentures, except capital indexed bonds issued by the Government. Sovereign Gold Bond issued under the Sovereign Gold Bond Scheme, 2015, is therefore, presently, not eligible for indexation benefits. Further, it provides that the gains on account of appreciation of rupee against a foreign currency are accounted for while calculating full value of consideration.
It is proposed to amend section 48 so as to provide indexation benefits to long-term capital gains arising on transfer of the said Sovereign Gold Bond.
It is further proposed to provide that in case of an assessee being a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purpose of computation of full value of consideration under the said section.
This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.
