Division of family trust may also fall under capital gains ambit

Sunil Shah, Partner, Deloitte Haskins & Sells LLP, said that earlier only individuals and HUFs were subject to such capital gains tax. This, he said, is now being extended to other categories as well. This will be applicable from April 1, 2018.Anish Sanghvi, Partner, PwC India said that the reduction of period of holding to 2 years to enjoy long-term gains rate as well as more avenues to save capital gains tax have been proposed. Sanghvi added that the litigation around joint development agreements may become history with clarity on timing of taxation at project completion.

According to the Finance Bill, "where the capital gain arises to an assessee, being an individual or a Hindu undivided family, from the transfer of a capital asset, being land or building or both, capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority."

Here, the stamp duty value will be deemed as the full value of the consideration received or accruing as a result of the transfer of the capital asset.

However, this will not apply if the assessee transfers his share in the project to any other person on or before the date of issue of said certificate of completion and the capital gains will be deemed as the income of the previous year during which such transfers took place.