Provisions of section 54EC provide exemption towards long term capital gain arisen on the transfer of land or building or both when the amount is invested into the specified bonds. The present article briefly explains the provisions of section 54EC of the Income Tax Act.
1. All categories of persons are eligible to avail exemption benefit under section 54EC of the Income Tax Act.
2. Section 54EC exemption is available only towards the capital gain arisen on account of transfer of long term capital asset (being land or building or both).
3. The assessee has invested the amount of capital gain (wholly or partly) in the long term specified assets.
4. The amount should be invested within a period of 6 months from the date of transfer.
5. The investment in the long term specified assets by an assessee during the Financial Year cannot exceed INR 50 Lakhs.
6. The investment in the long term specified assets by an assessee (from the capital gain arising from the transfer of one or more land or building or both) cannot exceed INR 50 Lakhs during the financial year in which the land or building or both is transferred and in the subsequent financial year.
7. “Long-term specified asset” for making any investment u/s 54EC means any bond redeemable after five years and issued by National Highways Authority of India (NHAI) or by Rural Electrification Corporation Limited or any other bond notified by central government. Finance Act 2018 has extended the time period to 5 years , earlier it was 3 years only.
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