Sunday, September 18, 2011

Sell anything — buy bonds save capital gain-54EC

By on 7:36 PM

If you have incurred capital gains on the sale of any long-term asset, (including property) and you do not wish to reinvest that money into a property, you can still avail an exemption under Section 54EC if you invest the long-term capital gains incurred into the specified bondswhich are National Highway Authority of India  NHAI) or Rural Electrification Corporation (REC). 
The investment needs to be done within a period of six months from the date of sale if the existing asset. 

However, there is a restriction on the investment amount to an extent of maximum `50 lakh per year,in aggregate and the lock in period of three years. 
Needless to say, if the withdrawal is done before the period of three years or even if the bonds are pledged as a security for any loan, it is considered as a transfer for the income tax purposes and the capital gains exemption availed earlier will be taxed as normal income in the year of withdrawal. 

This is generally used by the senior citizens or  middle-class category, who may not be wanting to invest a huge sum into another property or may want  income in a regular form by way of interests. The benefit of sections 54 and 54F is available to only individuals and HUF, whereas the benefit of section 54EC is available to all the assesses.

About Syed Faizan Ali

Faizan is a 17 year old young guy who is blessed with the art of Blogging,He love to Blog day in and day out,He is a Website Designer and a Certified Graphics Designer.


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