Taxliability

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ramprasad (Querist)
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08 August 2011 Is there any taxliability on redemption of REC bonds eligible of 54EC?

In other words what is the tax liability on the date of redemption of bonds purchased for tax benefit under section 54EC?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 August 2011 On redemption there is no tax liability
except interest accrued, which can be taken on yearly basis as income.

On pre-maturity withdrawal the Face value of Bond will be taxed as LTCG.

ramprasad

ramprasad (Querist)
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08 August 2011 sir,
what is basis could be to say that there is no tax liability.

I could not find any provision which support our view that there is no tax liability on redemption of bonds.

Please clarify

CMA Ashutosh Kumar Gupta

CMA Ashutosh Kumar Gupta (Expert)
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10 August 2011 ...because Bonds are redeemed at par that is at Cost=Sale price, hence no surplus, no gain.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 August 2011 In case you have purchased Bonds at a discount rate and are not listed, capital gain may be calculated on taking the redemption value as sales consideration.

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