The tax payment on capital gains can be reduced if we invest in
certain Capital Gain Bonds which are specified under Section
54EC BONDS:
- REC (Rural Electrification Corporation Ltd)
- NHAI (National Highways Authority of India)
- IRFC (Indian Railways Finance Corporation Limited)
- PFC (Power Finance Corporation Ltd)
INTEREST RATE AND TENURE OF 54EC BONDS:
- 54EC bonds offer 5% rate of interest payable annually.
- 54EC bonds have a lock in period of 5 years.
Any assesse (An Individual, HUF, Company, LLP, Firm etc.,)
- (LTCA) long term capital asset (i.e >24 months)
- Capital Gains Should be invested within 6 months from the date
of transfer.
MAXIMUM LIMIT:
The Maximum limit for investing in 54EC bonds is Rs. 50,00,000
EXAMPLE FOR 54EC:
Mr. Vasanth Sold Land In FY 2020-2021 For Rs. 50,00,000. It Was Purchased In FY
2014-2013 For Rs.20,00,000. And Vasanth Purchased NHAI Bonds For Rs. 40,00,000
(Within 6 Months) In FY 2020-2021.
Vasanth will be able to claim deduction under section 54EC as follows:
| PARTICULARS |
AMOUNT(RS.) |
| Sales Consideration |
50,00,000 |
| Less: Index Cost of Acquisition(20,00,000*289/220) |
(26,27,273) |
| Long Term Capital Gains |
23,72,727 |
| Less: Deduction U/S 54EC
(Maximum Exemption Limit is 50,00,000) |
(23,72,727) |
