LTCG and Basic Exemption Limit
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10 March 2020
Can experts please clarify my below query with regard to LTCG, capital gain bond investment and basic exemption limit?
A person sells a house and have got 10 Lakh as capital gains. He doesn't have any other source of income except for FD interest of Rs.10000 in the current financial year (2019-20). As per Sec 54EC, if he invests the capital gains into capital gain bonds, he need not have to pay tax. In this case, after adjusting income from other sources (Rs.10000) from basic exemption limit of Rs.2,50,000, he still has balance of Rs.2,40,000. As such, can he only invest Rs.7,60,000 in capital gain bonds after adjusting against the balance Basic exemption limit to reduce his tax liability to 0? From what I understand, this was allowed but someone said this adjustment is no longer available from AY 2020-21 as part of FY-19 budget proposal. Please advise if this adjustment is still valid for current FY.
A person sells a house and have got 10 Lakh as capital gains. He doesn't have any other source of income except for FD interest of Rs.10000 in the current financial year (2019-20). As per Sec 54EC, if he invests the capital gains into capital gain bonds, he need not have to pay tax. In this case, after adjusting income from other sources (Rs.10000) from basic exemption limit of Rs.2,50,000, he still has balance of Rs.2,40,000. As such, can he only invest Rs.7,60,000 in capital gain bonds after adjusting against the balance Basic exemption limit to reduce his tax liability to 0? From what I understand, this was allowed but someone said this adjustment is no longer available from AY 2020-21 as part of FY-19 budget proposal. Please advise if this adjustment is still valid for current FY.
10 March 2020
Such adjustment is allowable other experts also clarify this point.
11 March 2020
Such an adjustment is not specified in law. But if you do so , in the cited case, there will not be income tax liability.
The adjustment referred in the query is as per proviso to section 112(1)(a) and it is not amended either in Finance BIll ,2019 or in Finance bill,2020.
The adjustment referred in the query is as per proviso to section 112(1)(a) and it is not amended either in Finance BIll ,2019 or in Finance bill,2020.
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11 March 2020
Thanks Chakrapani and Seetharaman for your clarification.
11 March 2020
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