Interest Cost and Stamp Duty Excluded from LTCG Base Price, Says Revenue Secretary

On Wednesday, Revenue Secretary Sanjay Malhotra clarified that interest costs and stamp duty paid during the purchase of immovable property will not be considered when calculating long-term capital gains (LTCG). The recent Budget proposes a revised LTCG taxation framework for real estate, which will now feature a lower tax rate but exclude indexation benefits.

Malhotra explained that the base price for LTCG calculation will continue to be the amount paid to the seller, excluding any interest paid on loans used to acquire the property. Additionally, stamp duty payments will also not be factored into the base price for capital gain calculations, maintaining consistency with current provisions.

Regarding the review of the Income Tax Act of 1961, Malhotra highlighted that the aim is to simplify and streamline the Act to make it more user-friendly and concise. While drawing on previous work, the review will involve consultations with various stakeholders, and a revised IT law may be proposed in the next budget.

In relation to ongoing litigation concerning Angel Tax, Malhotra indicated that these issues could potentially be resolved under the new Direct Tax Vivad se Vishwas scheme.