Investors who purchase capital gains bonds are known as debt holders. 54EC bonds are issued by government backed infrastructure companies, which reduces the risk involved in purchasing such bonds. Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources.
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- No, you can’t redeem the investment before the maturity of bonds i.e. before 5 years from the date of investment.
- In case of transfer / conversion, the amount of exemption claimed under section 54EC shall be deemed to be income under ‘Capital Gains’ as long term capital gain in the previous year in which the long term specified asset is transferred or converted.
- Check out our Tax Planning Optimizer tool that helps you save taxes beyond Section 80C.
Schedule a call with an investment expert to get complete help regarding investment in 54EC Bonds in India.
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Please note that by submitting the above mentioned details, you are authorizing us to Call/SMS you even though you may be registered under DND. We shall Call/SMS you for a period of 12 months.Brokerage will not exceed SEBI prescribed limits Disclaimer Privacy Policy Any Grievances related the aforesaid brokerage scheme will not be entertained on exchange platform. Yes, the exemption under Section 54EC can be claimed multiple times related to the same property, subject to the overall limit of Rs.50 lakhs per financial year. As shown in example, assessee has tried to take double benefit of section 54EC by investing the amount in two different financial years but within six month after the date of transfer. But this planning is nullified by the Second Proviso u/s 54EC.
In addition, capital bonds offer dual benefit of wealth creation and tax saving. If you have any doubts or queries and want specialized advice from experts at SBNRI, contact us using the button below. With just over a few months left in the current tax year, many of us would already be doing year end tax planning and sussing out options to invest to either gain a tax deduction or tax exemption. We all have Rs.150,000 covered under section 80C in the form of PF or FDs or like.
The taxpayer will have to pay tax on the capital gains accordingly. Investors can enjoy tax exemptions under section 54EC of the Income Tax by repeal the lifo and lower of cost or market inventory accounting methods purchasing these bonds. However, interest earned through investment in these bonds is taxable as per your income tax slab. 54EC Bonds or Capital Gains Bonds is one such instrument to consider and know about, which will get you an exemption from the capital gains tax that you might have incurred on a long term asset provided certain conditions are met.
November 2024 Tax Compliance Deadlines for Income Tax and GST
And an additional deduction allowed up to a limit of Rs.50,000 under section 80D. The interest rate and policy with respect of 54EC bonds are subject to change from time to time, depending on government regulations and changing economic conditions. Investors are advised to keep themselves informed through the Notices periodically made available by PFC, IRFC, and REC. You can apply through your broker if you are interested in investing in 54EC bonds.
Recent Updates and Changes
If you have received capital gain from selling a property, you can invest in these bonds to avoid paying capital gain tax. Selling your capital assets for a generous amount of profit is surely a moment of joy, but it also comes with capital gains taxes. However, there are various ways to avoid this tax or minimize your capital gains tax liability. One such way is to invest your capital gains in capital gains bonds specified under section 54EC of the Income Tax Act. This guide will cover all that you need to know about capital gains bonds under section 54EC of the Income Tax Act. 54EC bonds are specifically meant for investors earning long-term capital gains and would like to get exemption on these gains.
Investors can compare them with FDs, PPF, and Debt Mutual Funds for returns. Tax implications include exemptions on long-term gains and taxable interest income. These bonds are suitable for tax-saving and conservative investors seeking safety.