Section 54EC?

BEFORE FILLING OF RETURN YOU HAVE INVEST ON THAT WHICH YOU C.G. ARISED OF THAT A.Y. NOT AFTER 2 YRS.

Capital gain not to be charged on investment in certain bonds. 54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45 : 70a[Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.] (2) Where the long-term specified asset is transferred or converted (otherwise than by transfer) into money at any time within a period of three years from the date of its acquisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1) shall be deemed to be the income chargeable under the head “Capital gains” relating to long-term capital asset of the previous year in which the long-term specified asset is transferred or converted (otherwise than by transfer) into money. Explanation.—In a case where the original asset is transferred and the assessee invests the whole or any part of the capital gain received or accrued as a result of transfer of the original asset in any long-term specified asset and such assessee takes any loan or advance on the security of such specified asset, he shall be deemed to have converted (otherwise than by transfer) such specified asset into money on the date on which such loan or advance is taken. 71[(3) Where the cost of the long-term specified asset has been taken into account for the purposes of clause (a) or clause (b) of sub-section (1),— (a) a deduction from the amount of income-tax with reference to such cost shall not be allowed under section 88 for any assessment year ending before the 1st day of April, 2006; (b) a deduction from the income with reference to such cost shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.] Explanation.—For the purposes of this section,— (a) “cost”, in relation to any long-term specified asset, means the amount invested in such specified asset out of capital gains received or accruing as a result of the transfer of the original asset; 72[(b) “long-term specified asset” for making any investment under this section during the period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007, means any bond, redeemable after three years and issued on or after the 1st day of April, 2006, but on or before the 31st day of March, 2007,— (i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988); or (ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), and notified72a by the Central Government in the Official Gazette for the purposes of this section with such conditions (including the condition for providing a limit on the amount of investment by an assessee in such bond) as it thinks fit:] 73[Provided that where any bond has been notified before the 1st day of April, 2007, subject to the conditions specified in the notification, by the Central Government in the Official Gazette under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause;] 74[(ba) “long-term specified asset” for making any investment under this section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956).]

Hi Chitra when you interperate the prov than you come to know that when you invest your money in the bond than you are no need to construct in your house.Only you cant withdraw money for 3 years

hi chitra, The provision is simple. Only that amt. of capital gain earned on the transfer of any capital asset shall be exempt from tax which, within six months of earning it, is invested in the said bonds. How ever, as per the latest amendment, any amount so invested after 1-4-2007, upto Rs.50000 shall be exempt.

u/s 54EC you have sale any CA than it is not necessary that you purchase any RHP for that you have invested in bond of NHAI & RECL within six month after the date of transfer. You have no sale new assets under within 3 years.if you have sale new assets within three years than your exemption is forfeited.

Excemption u/s 54 EC is now limited to 50 lakhs in a previous year . So if the period of 6 months falls in two financial years , one can claim 1 cror ie 50 lakh in March 08 and another 50 lakhs in April 08 - but the the date of transfer must be such that thase two dates fall within 6 months - any suggestions welcome

if u invest the whole of capital gain in 54EC bonds within 6 months of transfer u'll get full excemption - the gain becomes tax free suppose your gain is more than 50 laks , the excess over 50 laks will be subjected to 20% tax plus SC/Ec etc - this is because of the amendment recently made by limiting the maximum amount that can be invested to Rs 50 laks

Originally posted by :Peter,A.Matthai
"	if u invest the whole of capital gain in 54EC bonds within 6 months of transfer u'll get full excemption - the gain becomes tax free suppose your gain is more than 50 laks , the excess over 50 laks will be subjected to 20% tax plus SC/Ec etc - this is because of the amendment recently made by limiting the maximum amount that can be invested to Rs 50 laks	"

whether long term unlisted shares is included in the scope of  "long term capital asset" of section 54EC? and any long term capital gain arrising on the sale of these unlisted shares can be exempt under the section 54EC.

Dear Sirs,

 

I have a doubt in resepct of Sec 54EC provisions. Presume an assessee is getting long term capital gains more than 1 Crore in trading unlisted company shares which he wants to invest in the REC and NHAI. He has got his sale consderation on 2nd January 2011 through a single transaction. Can he invest Rs.50 lacs in REC before 31st March 2011 and again Rs.50 lacs in the month of April 2011 and avail tax exemption for Rs. 1 Crore. The balance sale consideration he likes to pay the required tax. Please confirm as to wheher he can do it and if yes is there any case laws to support. I have read the opinion in Taxman's Ready Reckoner which says it is permission.

Thanks

REC / NHAI 54EC Capital Gains Tax Exemption Bonds -2011-2012 Application Form

For More Details and investment

visit on www.lifins.in or  call on 9822403407

- Lifins Financial, Pune, Maharashtra, India.

 

A] Rural Electrification Corporation (REC)

 

 

About Company:

 

Rural Electrification Corporation (REC), was incorporated on July 25, 1969 under the Companies Act 1956. REC is a wholly owned Government of India Public Sector Enterprise with a net worth of over Rs. 11104.25 Crore as on 31-03-2010. Its main objective is to finance and promote rural electrification projects all over the country besides providing assistance for generation projects, transmission and distribution projects. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them.

 

B] National Highways Authority of India (NHAI)

 

About Company:

 

The National Highways Authority of India was constituted by an act of Parliament, the National Highways Authority of India Act, 1988. It is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental thereto. The Authority was operationalized in February, 1995 with the appointment of full time Chairman and other Members. 

 

National Highways Authority of India (NHAI) is mandated to implement National Highways Development Project (NHDP) which is

·         India 's Largest ever highways project

·         World class roads with uninterrupted traffic flow

The National Highways have a total length of 70934 km to serve as the arterial network of the country. The development of National Highways is the responsibility of the Government of India.

 

 

Salient Features:

 

v  Interest payment: Annual

v  Coupon rate : 6.00% payable annually.

v  Interest Payment: Payable on 31st March

v  Maturity:  3 years from Deemed Date of Allotment

v  Redemption: Bullet, at the time of Maturity after 3 years

v  Credit Rating : “ AAA/Stable” by CRISIL and “ AAA(ind)(Affirmed)” by Fitch Ratings

v  Face Value:  Rs. 10000/- per Bond

v  Issue price : Rs. 10000/- per Bond

v  Minimum application size : 1 Bond of Rs. 10,000/-

v  Maximum application size: 500 Bonds of Rs. 10,000/- each

v  subject to fulfilment of other conditions as specified in Income Tax Act.

v  Mode of Subscripttion:   100% on application

v  Deemed Date of Allotment:  Last day of each month for application money cleared and credited in collection account.

v  Transferability:  The Bonds are non-transferable, non-negotiable and cannot be

v  Offered as a security for any loan or advance

v  Date of Allotment : At the last day of every month

v  Date of Start:  01.04.2011

v  Date of Closure:  31.03.2012

v  Applicable Laws:  Income Tax Act 1961

v  Mode of payment: by A/c Payee cheques or DDs.

 

The following persons and institutions can apply for these bonds:

 

 Individual/ HUF/ Charitable Institute / University/ Company/ Mutual Funds/ Firms / NRI / Co-operative / NRI / Financial Institute

 

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For More Details and investment

visit on www.lifins.in  or  call on 9822403407

- Lifins Financial, Pune, Maharashtra, India.

 

I have a doubt…

In a partnership business..both the partners decide to wind up the business & they sold the factory for say40lakhs….after paying off all the debts & 35lakhs is the final profit & they share it in equal ratio..how to go about a proper tax-planning in order to avoid Capital-Gains tax..? 

Dear Sir,

If the Capital Gains amount is invested in NHAI, after 3 years, @ 6% we will be getting interest along with the principal amount. Is the interest on NHAI bonds taxed? Is any tds deducted? If so, what's the percentage.