Exemption u/s 54ec

I would like to know whether the capital gains tax liability is simply deferred for three years or fully exempt on purchasing of NHAI or REI bonds.

To be more specific if the assessee purchases the above mentioned bonds out of his capital gains money and holds it for a period of three years, and even after expiry of three years he does not utilise the money to purchase any other capital asset of the  same nature , then whether he shall be liable for capital gains tax after the expiry of the period.

 

Replies (5)

Investment to be made within 6months of sale transaction and the the investment so made should not be converted into money(i.e cannot sale and also can not be pledged as a security against a loan) for  a period of 3 yrs from the date of invst.

The investment made in the 54EC bonds to save Capital Gains Tax is fully exempt in the year when the investment is made.  However this investment shud be made within a period of 6m from the date of transfer.

But After 3 years when these bonds are liable to be redeemed, then again the redemption of bonds would be liable for CG tax.

Once the obligation of holding the specified bond for a period of three years completed (after purchasing the same within 6 months of capital gain transaction) the entire liability of capital gain is discharged. And same will not be taxable on redemption of the specified bonds.

Mr Saiyum Khan do you have any section reference or case law whihc states that the redemption of bonds i not taxable.  I am not sure if the redemption is exempt from tax.

I HAD INVESTED  BEFORE THREE YEAR IN THE Principal Tax Saver Fund  Rs. 20000 /- and after three year i have sold the same  and i get the Rs. 11000 /- as Redemption know it is exempted from my income or it taxable

 

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