Capital Gains

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A client sold property in AY 2020-2021, incurring capital gains. They invested the proceeds in specified bonds under the Income Tax Act to claim tax exemption. The query seeks clarification on the tax implications upon the maturity of these bonds. Specifically, it asks whether only the interest earned will be taxable, or if both the principal and interest will be subject to tax at maturity.

Bapun Dasgupta

Bapun Dasgupta (Querist)
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25 August 2020 My client has sold property and has incurred Capital Gains in the AY 2020-2021. He wants to invest the amount in the specified bonds as laid down in the Income Tax Act in order to claim tax exemption. If he invests the same, what will be the tax incidence on the client on the maturity of these specified bonds ? Will only interest be taxable or the entire amount of Principal & Interest will be taxable on maturity ? Best regards.