Investment u/s 54EC

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Suraj (Querist)
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24 January 2024 Dear Sir / Madam,

Section 54EC of the Income Tax Act says the amount of capital gain should be invested within 6 months from the date of transfer to avail this exemption. My two scenarios are as follow:

Scenario 1 -
Mr. A sold a flat on 21/03/2024. So he can invest the capital gain amount in 54EC-eligible bonds till 20/09/2024.
But since the due date of filing his ITR is 31/07/2024, this investment is required to be done before 31/07/2024. Am I right?

Scenario 2 - Mr. A decides to invest the capital gain amount in the New house property. For resale property, he has a time limit of 2 years after the sale of the old property i.e. up to 20/03/2026 OR he can invest in self-construction or under-construction property till the end of 3 years after the sale of the old property i.e. up to 20/03/2027.
Therefore, he keeps this capital gain amount in the Capital Gains Deposit account scheme. But just before the completion of 2 years, on 01/03/2026 he decided not to invest in new property.
So my query is that: Can he NOW invest this capital gain amount kept in the Capital Gains Deposit Account Scheme (before the completion of 2 years) in 54EC-eligible bonds? or this option is gone and the capital gain not invested would be taxable in 2026?

Please guide.

Thanks & Regards,
Suraj

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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09 July 2024 Mr. A needs to invest in 54EC bonds before 31st July 2024 to claim exemption from long-term capital gains tax for FY 2023-24. If he decides to invest in a new residential property, he cannot invest the capital gains amount in 54EC bonds after 20/09/2024. Failure to do so could result in uninvested capital gains becoming taxable in the financial year in which the original asset was sold. It's crucial for Mr. A to adhere to the specified timelines to ensure tax exemption on the capital gains.

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