Exemption under section 54ec

This query is : Resolved

Akash Jain (Querist)
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14 April 2012 The redeemable bonds of NHAI or RECL are purchased for the purpose of claiming exemption u/s 54EC.

What is the tax treatment when these bonds will be redeemed after the specified period, if all the conditions of Section 54EC are satisfied to claim the exemption?

What will be the tax treatment for interest earned every year on such Bonds?

Can we reinvest the amount received on redemption in bonds to claim exemption again?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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14 April 2012 Interest received everyyear is taxable.

Principal Amount received on redemption is tax free.

Prof. Bajaj

Prof. Bajaj (Expert)
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14 April 2012 Agree with Mr. Aditya.

No need to invest the redemption amount of bonds for claiming exemption.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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15 April 2012 The interest on the Bonds invested by you u/s 54EC is taxable with your other income and every year you have to pay advance tax otherwise you will be liable for interest u/s 234C as no TDS is done by the bond issuing authorities.

The money received by you after the period of 3 years you can invest, utilise and use in any manner as may think fit. It is not at all necessary to re-invest. it is fully tax free in your hands.

Akash Jain

Akash Jain (Querist)
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15 April 2012 Thanks for your valuable replies..
Thanks a lot..

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