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| 54EC Bonds |
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These are instruments primarily meant for saving capital gains tax in case of selling a non agricultural property. When we have capital gains on sale of land or property, we can reduce the tax payout using the following sections:
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54EC – By investing in bonds
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54 F – By investing in a new residential property
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To claim rebate under section 54EC, the following conditions must be satisfied:
Long Term Capital Asset means any capital asset held by assessee for more than 3 Years.
If the assesee has sold the long term capital asset during the previous year and made a long term capital gain then he can invest the gains in capital gain bonds and can save tax on LTCG.
Assessee here means all type of assessees, like individual, firm, company etc.
Bonds can not be pledged ,sold transfer before completion of three year from purchase of bonds ,and in case they are transferred then amount capital gain exempted on investment in these bonds will be made taxable in that previous year as Long term capital gain
Amount to be invested in bonds is only capital gain and not net consideration received on sale of the long term capital asset.
Amount exempted under this section will be lower of, amount of capital gains or amount invested in capital gain bonds subject to maximum of 50Lakh.
Amount of capital gain should be invested in Capital gain bond within 6 Month from date of transfer/sale of capital asset .
Capital gain bonds eligible under this section are now issued only by REC or NABARD and have a maturity period of 3 years.
Tip : The exemption limit for these bonds in 50 lakh per financial year. However incase your limit of six months from date of sale of property falls in 2 financial years, you may invest 50 L in each financial year, taking a full advantage of upto Rs 1 crore. |
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