Rationalization of Section 43CA, Section 50C and Section 56
♦ Section 43CA: It provides that in case the consideration for transfer of stock in trade, being land or building, is less than the stamp duty value, then Stamp Duty Value shall be deemed to be the sale price of such stock – Section for PGBP.
♦ Section 50C: It provides that in case the consideration received or receivable from transfer of a capital asset, being land or building, is less than the stamp duty value, then Stamp Duty Value shall be deemed to be the full value of consideration – Section for Capital Gains.
♦ Section 56(2)(x): It provides that in case a person receives any immovable property at a value less than the stamp duty value by INR 50,000, then the balance shall be treated as Income from other sources – Section for Other Sources.
♦ Finance Bill, 2018 has made an amendment under the above sections in order to provide that difference upto 5% between actual consideration and stamp duty value shall be ignored.
♦ The amendments are effective from F.Y. 2018-19 onwards.
Provisions relating to conversion of stock into capital asset
♦ Income tax law currently provides provisions for conversion of capital asset into stock in trade. The taxability in such cases shall be as under:
> Fair Market Value on the date of conversion shall be the full value of consideration to be taken for capital gains purpose.
> Actual Cost of capital asset shall be taken as the cost of acquisition of such stock.
> Period of holding will be the period starting from acquisition date to conversion date.
> The Capital Gains are taxable in the year in which stock will be sold.
♦ Amendment: New Provisions have been introduced for the vice-versa cases of conversion of stock-in-trade into capital assets. The taxability in such cases shall be as under:
> The Fair Market Value on the date of conversion shall be deemed to be the Sale price under the head PGBP.
> Cost will be considered as actual cost of purchase of stock-in trade.
