Encashment of rec bonds u/s 54ec, Income Tax

[satbir singh wahi]

whether investment in rec bonds u/s54ec can be encashed on death of the holder by legal heirs before maturity.

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[Mukesh Kumar]

The reading of section 54EC(2) is plain and unambiguous as in my view that in case of encashment of bond before three years invested u/s 54EC is taxable under section 45. Moreover it would be taxable in the year in which condition is violated. Therefore, since it is taxable in the year of encashment, the legal heirs would be liable to pay tax.