Capital Gain Exemption by making Investment in certain bonds of REC and NHAI

As per the Section 54EC of the Income Tax Act, 1961 any capital gain arises from the transfer of long term capital assets and the assessee has, at anytime within a period of six months after the date of such transfer, invested the whole or any part of capital gains in specified bonds.

  • Conditions
    • LTCA is transferred by individual, HUF, FIRM, Company, or another person during previous year.
    • Maximum Amount of Investment in specified Bonds is limited to Rs.50 lacs for Financial Year.
    • Within a period of 6 months, the capital gain arises should be invested in bonds redeemable after 3 years issued by-
  1. National highway Authority of India
  2. The rural Electricity Corporation Ltd.
  • Exemption amount will lower of below amount:
  1. Capital gain arises on transfer of capital asset
  2. The amount invested in specified asset as mentioned above
  • If new asset is transferred within 3 years

    If the specified asset are transfer before the specified time period

    Then the amount previously exempted from tax will be charable to tax in the previous year it occurs.

TAX HELP: So Assessee can always Invest Rs.50 before 31st march and another Rs.50 lacs in next financial year and take the maximum benefit of Rs.100 lakhs if the asset was sold between 1st October to 31st March as assessee has the window of 6 months for investment and this can be divided between two financial years.

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