Period of Holding Property
Summary :- As per Amended section 2 (42A) of Income Tax Act, by Clause 3 of Finance bill 2017 , w.e.f 01.04.2017 (AY 2018-19) if immovable property, being land or building or both, is held for 24 months than it will be treated as long term capital asset.
[Clause 3 of Finance Bill 2017 ]
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, Finance Bill 2017 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.
The existing provisions contained in clause (42A) of Section 2 defines the expression “short-term capital asset” to be a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer. Further Explanation 1 of the said clause provides for determining the period for which the capital asset is held by the assessee.
Finance Act 2017 proposed to amend the third proviso to the said clause so as to provide that in the case of an immovable property being land or building or both, the aforesaid period of holding shall be less than twenty-four months for it to be treated as short 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. Thus this Amendment will take place from Financial year 2017-18 (AY 2018-19)
Relevant Amendment of section 2 on Period of Holding Property
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;
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