How is Shifting Base Year From 1981 To 2001 For Capital Gains defined?

The existing provisions of Section 55 provide that for computation of Capital Gains, an assessee shall be allowed deduction for Cost of Acquisition of the Asset and also cost of Improvement if any.

However, for Computing Capital Gains in respect of asset acquired before 01.04.1981, the assessee has been allowed an option to take the Fair Market Value of the Asset as on 01.04.1981or the actual cost of the asset as cost of acquisition. The assessee is also allowed to claim deduction for the cost of improvements incurred after 01.04.1981.

Shifting Base Year From 1981 To 2001: In order to revise the base year for computation of capital gains, it is amended in Section 55 of the Act 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 01.04.2001 and the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001.

Consequential amendment is also proposed in section 48 of the Act so as to align the provisions relating to Cost Inflation Index to the proposed base year (2001-2002). These amendments will take effect from 01.04.2017, and will, accordingly, apply to the Assessment Year 2018-2019 and subsequent years.

Any asset (Land or Building or both), if it is acquired on or before 01.04.2001, and sold before 01.04.2017, indexation is permitted to old Cll from 01.04.1981. New Indexation is permitted only for assets sold after 01.04.2017.

From FY 2017-18 onwards - The criteria of 36 months have been reduced to 24 months in the case of immovable property being land, building, and house property. For instance, if the house property is sold, after holding it for a period of 24 months, any income arising will be treated as long-term capital gain provided that property is sold after 31st March, 2017. CIl in relation to a previous year means such index, as Central Government notifies on year to year basis.