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Capital Gains Tax planning - 54 EC tax bonds

mathur mathuria (director) (26 Points)

26 February 2010

Question is can I proect against the entire tax liability by purchasing say 40 lakh of bonds this tax year and another 20 lakh in say July 2010 (before I file my tax return) ?

or do I have to pay the Capital Gains Tax this year on the excess over 50 lakh or whatever i can invest this year ? Any people with such experience ? Thank you in advance for correct advice.

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5 Replies

C.Balaji (Learner) (1867 Points)
Replied 27 February 2010

Dear Mathur sir.........

We have already discussed whether we can invest above 50 lacs(50lacs before march and 50 lacs before july as you said) in 54 EC bonds.....but it is restricted to only 50 lacs.........

There are other sections or exemptions available for you......

If the LTCA is a Res.House then you have Sec. 54....

1. Section 54 - Transfer of Residential House and Purchase or construction of a new Res. house.....

If the LTCA is other than Res. House then you have sec 54 F and 54 EC....

2. Section 54 F - Transfer of Long Term Capital Asset (other than a Res. House ) but purchase / construction of a Res. house.

Before investment please go through the provisions of sections 54, 54 F and 54 EC........

Please follow this link too........

https://www.caclubindia.com/forum/54ec-66057.asp?1=1&offset=1

ca ankita kesarwani (gbfb) (119 Points)
Replied 10 March 2010

Originally posted by : mathur mathuria

I have capital gain of 60 lakh this year, but the REC bond limit under section 54EC is 50 lakh per year. Since my gain was made in January 2010, I have until July 2010 (6 month limit) to buy the bonds to avoid paying the Capital Gains Tax.

Question is can I proect against the entire tax liability by purchasing say 40 lakh of bonds this tax year and another 20 lakh in say July 2010 (before I file my tax return) ?

or do I have to pay the Capital Gains Tax this year on the excess over 50 lakh or whatever i can invest this year ? Any people with such experience ? Thank you in advance for correct advice.

yes...its a right planning...bcoz as per section 54 EC ..an assessee is required to invest net consideration to the maximum of 50 lakhs in any F.Y. .

i.e u can invest upto 50 lakhs within march and balace till july....

thus der could b good tax planning 100 lakhs.

C.Balaji (Learner) (1867 Points)
Replied 10 March 2010

Dear Ankita.......

Please see this link.....

https://www.caclubindia.com/forum/54ec-66057.asp?1=1&offset=1

Lifins Financial (Owner) (41 Points)
Replied 08 April 2011

REC / NHAI 54EC Capital Gains Tax Exemption Bonds -2011-2012 Application Form

For More Details and investment

visit on www.lifins.in or call on 9822403407

- Lifins Financial, Pune, Maharashtra, India.

A] Rural Electrification Corporation (REC)

About Company:

Rural Electrification Corporation (REC), was incorporated on July 25, 1969 under the Companies Act 1956. REC is a wholly owned Government of India Public Sector Enterprise with a net worth of over Rs. 11104.25 Crore as on 31-03-2010. Its main objective is to finance and promote rural electrification projects all over the country besides providing assistance for generation projects, transmission and distribution projects. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them.

B] National Highways Authority of India (NHAI)

About Company:

The National Highways Authority of India was constituted by an act of Parliament, the National Highways Authority of India Act, 1988. It is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental thereto. The Authority was operationalized in February, 1995 with the appointment of full time Chairman and other Members.

National Highways Authority of India (NHAI) is mandated to implement National Highways Development Project (NHDP) which is

· India 's Largest ever highways project

· World class roads with uninterrupted traffic flow

The National Highways have a total length of 70934 km to serve as the arterial network of the country. The development of National Highways is the responsibility of the Government of India.

Salient Features:

v Interest payment: Annual

v Coupon rate : 6.00% payable annually.

v Interest Payment: Payable on 31st March

v Maturity: 3 years from Deemed Date of Allotment

v Redemption: Bullet, at the time of Maturity after 3 years

v Credit Rating : “ AAA/Stable” by CRISIL and “ AAA(ind)(Affirmed)” by Fitch Ratings

v Face Value: Rs. 10000/- per Bond

v Issue price : Rs. 10000/- per Bond

v Minimum application size : 1 Bond of Rs. 10,000/-

v Maximum application size: 500 Bonds of Rs. 10,000/- each

v subject to fulfilment of other conditions as specified in Income Tax Act.