This amendment in the Act was proposed in Finance Bill, 2017 to tax, capital gains arising to individuals and HUFs who enter into specific agreement (JDA to be registered) from transfer of a capital asset (land, building or both), the CG shall be charged as income in the previous year only when a CC (Completion Certificate) for the whole or part of the project is issue by competent authority.
Full Value Consideration shall include stamp duty value (guideline value) as on CC date and money consideration (value of any receipt over and above the flats received in kind). This is now provided under section 45(5A) of the IT act w.e.f 01/04/2018. It is also provided that, this section will not be applicable if the assessee transfers his share/part of his share before obtaining the CC and CG will be chargeable in the previous year of the pre-mature transfer taking place.
Prior to this amendment, under 2(47), the trigger for a transfer taking place occurs on the date of surrender of property to the developer.
This was earlier pointed out in an SC case called Balbir Singh Maini in 2017.
Limitations and ambiguities clouding this section –
1) Section 54 and 54F applicable from the date of surrender of property and not on obtaining the CC.
2) Indexation benefit - where indexation should be considered till date of CC or date of transfer?; Logically, indexation is to be computed till the date of CC, as FVC is computed on guideline value on CC date and not on the date of transfer.
This is a welcome move by the government, helping lessen the upfront burden to pay huge taxes before realization of income in the hands of land owners.
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