Regarding 54ec

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 June 2016 My client was Sold a property on March 2016 and he invested 50 Lakhs under 54EC. Then Again he sold another property on April 2016, invested another 50 lakhs. Problem is these two investments were made on May 2016 ie in the same financial year. can he get exemption in both AY's???

Rupesh Jain

Rupesh Jain (Expert)
Follow

23 June 2016 no under this section limit of exemption in a finance year rs. 50 lacs not the per property limit.

you have to make one investment in march and another in may-16 as you tell.

Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2016 Thank You for the Reply Sir,

But, the Assessment Year is different for the properties Sold!!!!!!!!!

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
Follow

20 July 2025 Great question! Here’s the key point about Section 54EC exemption and your client’s case:

54EC exemption limit is Rs. 50 lakhs per financial year, not per assessment year.
The exemption is based on the financial year (April to March) in which the capital gain arises and the investment is made.
Your client’s situation:
Sold 1st property in March 2016 (FY 2015-16, AY 2016-17) and invested Rs. 50 lakhs in 54EC bonds in May 2016 (FY 2016-17).
Sold 2nd property in April 2016 (FY 2016-17, AY 2017-18) and invested another Rs. 50 lakhs in May 2016 (FY 2016-17).
What this means:
Both investments were made in the same financial year (FY 2016-17).
So the total exemption under 54EC for FY 2016-17 is capped at Rs. 50 lakhs (not Rs. 100 lakhs).
Your client cannot claim Rs. 50 lakhs exemption for each AY separately if the investments fall in the same financial year.
Even if capital gains arise in two different assessment years, the investment limit is considered on a financial year basis.
Bottom line:
Your client’s total exemption under 54EC for FY 2016-17 is Rs. 50 lakhs only.
If investments exceed 50 lakhs in the same FY, the excess amount will not be exempt and will be taxable as capital gains.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now