Section 54EC - Investment in Certain Bonds - Income Tax - Ready Reckoner - Income Tax

Section 54EC - Exemption on CG on transfer of LTCA not to be charged on Investment in Certain Bonds [ w.e.f. A.Y. 2019-20 ] Assessee Any Person Nature of Asset Long-term capital asset Asset to Transfer Land, Building or Both Investment in specified Assets Amount of exemption The assess should invest the whole or any part of the capital gain in long term in Long term Capital Assets with in 6 month from the date of transfer of the asset. Long term specified assets Bonds redeemable after 5 years issued by, a) National Highway Authority of India (NHAI) ; or b) Rural Electrification Corporation Ltd (RECL) ; or c) Power Finance Corporation Ltd. (PFC) [ Notification No. 47/2017 Dated 8th June, 2017 ] ; or d) Indian railway Finance Corporation Ltd. (IRFC) [ Notification No. 79/2017 Dated 8th August, 2017 ] 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. Note:- long-term specified asset for making any investment under this section, (i) on or after the 1st day of April, 2007 but before the 1st day of April, 2018, means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 but before the 1st day of April, 2018; (ii) on or after the 1st day of April, 2018, means any bond, redeemable after five years and issued on or after the 1st day of April, 2018, Where the cost of the long-term specified asset has been taken into account for the purposes of section 54EC 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. The investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. Where the long-term specified asset is transferred or converted (otherwise than by transfer) into money at any time within a period of Five years from the date of its acquisition , in other words the assessee should not transfer or convert or avail loan or advance on the security of such bonds for a period of 5 year from the date of acquisition of such bonds. Consequences of if bonds transfer 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 clause (b) of section 54EC(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. In case of conversion of capital assets into stock in trade and subsequent sale of stock in trade - Period of 6 month to be reckoned from the date of sale of stock in trade for the purpose of section 54EC exemption. [ CBDT circular no. 791 dated 02.06.2000 ]. Time limit Purchase: Within 6 months from the date of transfer of original asset. Capital Gain Deposit Scheme Not Available Quantum of Deduction Lower of: - a) Capital Gains, or b) Cost of New Asset Transfer Condition If such New Asset transferred or converted into money within 5 Years from the date of acquisition then exempt LTCG will be taxable in year of transfer/conversion.