Incentives for Promoting Investment in immovable property

The existing provision of the Act provide for concessional rate of tax and also indexation benefit for taxation of capital gains arising from transfer of long-term capital asset. To qualify for long-term asset, an assessee is required to hold the asset for more than 36 months subject to certain exceptions, for example, the holding period of 24 months has been specified for unlisted shares.

With a view to promote the real-estate sector and to make it more attractive for investment, it is proposed to amend section 2 (42A) of the Act so as to reduce the period of holding from the existing 36 months to 24 months in case of immovable property, being land or building or both, to qualify as long term capital asset.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

[Clause 3]

Extract of relevant clause from Finance Bill, 2017

Amendment of section 2.

3. In section 2 of the Income-tax Act, in clause (42A),—

(a) in the third proviso [as inserted by section 3 of the Finance Act, 2016], after the words and brackets “a company (not being a share listed in a recognised stock exchange in India)”, the words “or an immovable property, being land or building or both,” shall be inserted with effect from the 1st day of April, 2018;

(b) in Explanation 1, in clause (i),—

(A) after sub-clause (he), the following sub-clause shall be inserted with effect from the 1st day of April, 2018, namely:—

“(hf) in the case of a capital asset, being equity shares in a company, which becomes the property of the assessee in consideration of a transfer referred to in clause (xb) of section 47, there shall be included the period for which the preference shares were held by the
assessee;”;

(B) after sub-clause (hf) as so inserted, the following sub-clause shall be inserted, namely:—

“(hg) in the case of a capital asset, being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in clause (xix) of section 47, there shall be included the period for which the unit or units in the consolidating plan of a mutual fund scheme were held by the assessee;”.

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One response to “Immovable property held for 2 Years to be considered Long Term capital asset”

  1. Abhiraj says:

    I had purchased the capital asset on 02/02/17 i.e in FY 16-17. Suppose I sell the same on 28/02/19 i.e. in FY 18-19.
    Hence, I had held this capital asset for more than 2years.
    Whether it will be treated as Short term capital asset or long term capital asset during the time of sale

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