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Calculate Indexed Cost & Long Term Capital Gain
applicable from FY 2017-18 (AY 2018-19)

Amendments related to Capital Gains applicable from w.e.f. 01.04.2017

Amendments related to Capital Gains applicable from w.e.f. 01.04.2017

• Shifting of base year - In order to revise the base year for computation of capital gains, section 55 of the Income Tax Act, 1961 was amended vide Finance Act, 2017 so as to provide that the cost of acquisition of an asset acquired before 01.04.2001 shall be allowed to be taken as fair market value as on 1st April, 2001 and the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001.
• Holding period of immovable property - In order to avail the indexation benefit and the concessional tax rate of 20% on transfer of a long-term capital asset, the holding period for immovable property reduced from 36 months to 24 months.
• Investment of Long term Capital Gains - The current tax provisions provide for exemption of long term capital gains to the extent of INR 50 lakhs from tax, if the taxpayer invests the whole or any part of capital gains in National Highway Authority of India or Rural Electrification Corporation Limited bonds within the specified time. In order to stimulate investment and growth in other sectors through funding, the Budget proposed to extend this incentive to other Central Government notified bonds redeemable after 3 years. Though the tax payer will have options for investing in different bonds, the investment limit of INR 50 lakhs has not been altered.
• Capital gains arising in Joint Development Agreements ('JDA') - In order to reduce the burden on land owners being individuals or HUFs, the Budget proposes to consider the transfer as taking place in the year in which the development of the project is completed and taxing the capital gains in the year in which the certificate of completion is issued. The fair value of consideration for such transfer shall be deemed to be the aggregate of the stamp duty value as on the date of issue of the completion certificate and the consideration received in cash. Tax withholding at 10% is also proposed on the cash consideration payable to the land owner.
• Exemption under Section 10(38) of the Act - It has been proposed to restrict the exemption available on sale of listed shares, only to such shares which have suffered STT on purchase. The exceptions to this provision are as follows:
  Shares purchase before October 1, 2004
  Other shares to be notified by the Central Government, which are indicated:
  Shares acquired in IPO
  Shares acquired in FPO
  Shares issued as bonus or right shares, etc.
• Conversion of Preference shares to Equity shares to be tax neutral - The Budget proposes to amend section 47 of the Act, stating that conversion of preference shares of a company to equity shares will not be treated as transfer. The absence of this provision had raised concerns as conversion of debentures into equity was specifically not treated as transfer

  Cost inflation index for Long Term Capital Assets sold after 01.04.2017 as notified by CBDT Notification No. 44/2017 dated 05.06.2017

  Financial Year(FY)	Assessment Year(AY)	Cost Inflation Index
  2001-02	2002-03	100
  2002-03	2003-04	105
  2003-04	2004-05	109
  2004-05	2005-06	113
  2005-06	2006-07	117
  2006-07	2007-08	122
  2007-08	2008-09	129
  2008-09	2009-10	137
  2009-10	2010-11	148
  2010-11	2011-12	167
  2011-12	2012-13	184
  2012-13	2013-14	200
  2013-14	2014-15	220
  2014-15	2015-16	240
  2015-16	2016-17	254
  2016-17	2017-18	264
  2017-18	2018-19	272
  2018-19	2019-20	280
  2019-20	2020-21	289
  2020-21	2021-22	301

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