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CHANGES IN THE PROVISIONS FOR CAPITAL GAINS IN THE FINANCE BILL, 2017

Budget - By: - Mr. M. GOVINDARAJAN - Dated:- 6-2-2017 - Part E of Part IV of Chapter IV of Income Tax Act, 1961 ( Act for short) deals with capital gains. Section 45 to 55A are the provisions dealing with the capital gains. Section 45(1) provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head Capital gains .....

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oth, under a specified agreement, the capital gains 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. For the purposes of Section 48, the stamp duty value, on the date of issue of the said certificate of his share, being land or building or both in the project, as increased by the consideration received in cash, if any, shall be deemed to be full value of the considera .....

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rpose of determination of full value of consideration received or accruing as a result of such transfer. Explanation to this section defines the following terms- competent authority means the authority empowered to approve the building plan by or under any law for the time being in force; specified agreement means a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such land or building or both, in considera .....

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ot regarded as transfer for the purpose of computation of capital gains . Clause 23(a) of the Bill seeks to insert clause (viiaa) after the clause (viia). The new clause reads as below- (viiaa) any transfer, made outside India, of a capital asset being rupee denominated bond of Indian company issued outside India, by a non resident to another nonresident. Clause 23(b) of the Bill seeks to insert a new clause (xb) after clause (xa) which reads as below- (xb) any transfer by way of conversion of p .....

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or for the year begin­ning on the 1st day of April, 1981, whichever is later. Clause 24(b) of the Bill seeks to substitute the date 01.04.2001 for the date 01.04.1981. The said change will come into effect from 01.04.2018. Cost with reference to certain mode of acquisition Section 49 of the Act deals with the cost with reference to certain mode of acquisition. Section 49(1)(e) of the Act provides that where the capital asset became the property of the assessee under any such transfer as is .....

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Clause 25(a) of the bill seeks to insert the words or clause (vic) after clause (vib), which will come into effect from 01.04.2018. Clause 25(b) of the bill seeks to insert the new sub-section 2(AE) after sub section 2(AD), which will come into effect from 01.04.2018. The new Section 49(AE) provides that where the capital asset, being equity share of a company, became the property of the assessee in consideration of a transfer referred to in clause (xb) of Section 47, the cost of acquisition of .....

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hall be deemed to be the cost of acquisition to him of the unit or units in the consolidating plan of the scheme of the mutual fund. Section 49(4) provides that Where the capital gain arises from the transfer of a property, the value of which has been subject to income-tax under clause (vii) or clause (viia) of sub-section (2) of section 56, the cost of acquisition of such property shall be deemed to be the value which has been taken into account for the purposes of the said clause (vii) or clau .....

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ion to clause (37A) of Section 10, which has been transferred after the expiry of the two years from the end of the financial year in which the possession of such asset was handed over to the assessee, the cost of such acquisition of such specified capital asset shall be deemed to be its stamp duty value as on the last day of the second financial year after the end of the financial year in which the possession of the said specified capital asset was handed over to the assessee. The explanation t .....

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to in the proviso to the said sub-section the cost of acquisition of such asset, shall be the amount which is deemed as full value of consideration in that sub section. Clause 25(f) of the Bill proposes to insert sub-section (8) which shall be deemed to have been inserted with effect from 01.06.2016. The newly inserted Section 49(8) provides that where the capital gain arises from the transfer of an asset, being the asset held by a trust or an institution in respect of which accreted income has .....

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