28/02/2019
Capital gain not to be charged on investment in certain bonds [Sea 54EC] The salient features of section 54EC are given below :-
CONDITIONS The following conditions should be satisfied :
1 Long-term capital asset :- Long term capital aseet is transferred by an assessee (who may be an individual firm, company, or any other person) during the previous year. From the assessment year 2019-20, section 54EC is applicable if longterm capital asset (being land or building or both) is transferred.
2.Investment "specified asset :- Within 6 months from the date of transfer of the asset, the assessee should invest' the whole (or any part of) capital gain in long-term specified assets. “Long-term specified assets" means any bond redeemable after 3 years (5 years, if such bond is issued on or after April 1, 2018) issued
a. by the National Highways Authority of India (NHAI); or
b. by the Rural Electrification Corporation Ltd. (REC); or
c. by any other authority but bonds are notified by the Central Government (i.e., bonds issued by Power Finance Corpn./Indian Railways Finance Corpn.) for this purpose (applicable from the assessment year 2018-19).
The investment made on or after April 1,2007 in the longterm specified assets noted above by an assessee during any one financial year cannot exceed Rs. 50 lakh. Moreover, from the assessment year 201516, investment made by an assessee in the specified asset, out of capital gains ; arising from transfer of one 01 more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year should not exceed Rs. 50 lakh.
AMOUNT OF EXEMPTION :- The amount of exemption under section 54EC is as follows :-
a. the amount of capital gains generated on transfer of capital asset; or
b. the amount invested in specified asset as stated above,
whichever is lower. The cost of specified assets which is considered for the purpose of section 54EC shall not be eligible for deduction under section 80C.
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