Clause - 024 - Amendment of section 48.

THE FINANCE BILL, 2017

Clause 24 of the Bill seeks to amend section 48 of the Income-tax Act relating to mode of computation.

Under the existing provisions of the said section, "indexed cost of acquisition" is defined to be an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later.

It is proposed to make consequential amendments to the said section so as to replace the reference of 1st day of April, 1981 with the 1st day of April, 2001.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply to the assessment year 2018- 2019 and subsequent years.

 

Indexed cost base changed for capital gains computation, altering base-year reference and effective assessment period. Amendment revises the benchmark year used in the computation of the indexed cost of acquisition by replacing the earlier base-year reference with a more recent base year, with consequential changes to the mode of computation and prospective application to the stated assessment year and subsequent years, thereby altering the use of the Cost Inflation Index in proportionately adjusting cost of acquisition for capital gains.