54EC Bonds

These are instruments basically implied for sparing capital increases charge if there should be an occurrence of offering a non horticultural property. When we have capital picks up at a bargain of land or property, we can decrease the duty payout utilizing the accompanying segments:

  • li-icon

    54EC – By investing in bonds

  • li-icon

    54 F – By investing in a new residential property

To claim rebate under section 54EC, the following conditions must be satisfied:

  • li-icon

    Long Term Capital Asset means any capital asset held by assessee for more than 3 Years.

  • li-icon

    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.

  • li-icon

    Assessee here means all type of assessees, like individual, firm, company etc.

  • li-icon

    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

  • li-icon

    Amount to be invested in bonds is only capital gain and not net consideration received on sale of the long term capital asset.

  • li-icon

    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.

  • li-icon

    Amount of capital gain should be invested in Capital gain bond within 6 Month from date of transfer/sale of capital asset .

  • li-icon

    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.