Interest cost, stamp duty not to be included in the base price for calculation of LTCG on properties: Revenue Secy

Revenue Secretary Sanjay Malhotra on Wednesday said that interest cost and stamp duty paid for purchasing immovable property will not be added to the base price for calculation of long-term capital gain. The Budget has proposed reworked long-term capital gain taxation for immovable property at lower rate but without indexation.

“Under the existing mechanism, the base price for calculation of LTCG is the price paid to the seller. This does not include interest paid by the buyer if he or she takes a loan to purchase the property. There is no change in this provision which means only the price paid to the seller will be taken for calculation of LTCG under the new mechanism,” he told BusinessLine. Further, he said payment of Stamp Duty will also not be included in the base price for calculation of capital gain. This is the same position as mentioned in the existing system.

• Also read: How the change in capital gains tax on property impacts you

On review of the Income Tax Act 1961, he said that the primary purpose of this review is to simplify the existing act so that it becomes easier to read, easier to understand, and make it concise at the same time. “Of course, it will draw upon the work which has been done earlier, but this will be done through our internal committee. We will do a consultation at the appropriate time with various stakeholders and effort will be to make it concise,” he said, while indicating that the next budget might see a bill for new IT law.

On the issue of old litigation related with Angel Tax, he said that these might be permitted to be resolved under the new Direct Tax Vivad se Viswas scheme.