Section - 55 - Shifting base year from 1981 to 2001 for computation
of capital gains -
Section 55 provides that for
computing 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 an asset acquired before 01.04.1981, the assessee has been
allowed an option of either to take the fair market value of the asset as on
01.04.1981 or the actual cost of the asset as cost of acquisition. The assessee
is also allowed to claim deduction for cost of improvement incurred after
01.04.1981, if any.
Since more than three decades
have passed since the base year has been adopted, assessees are facing genuine
difficulties in computing the capital gains in respect of a capital asset,
especially in the case of an immovable property acquired before 01.04.1981 due
to non-availability of relevant information for computing of fair market value
of such asset as on 01.04.1981.
In order to revise the base year
for computing of capital gains, it is proposed to amend 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 1st April,
2001 and the cost of improvement shall include only those capital expenses
which are incurred after 01.04.2001.
In order to align the provisions
relating to cost inflation index to the proposed base year, consequential
amendment is also proposed in section 48.
The amendment will be effective
from 1st April 2018.