Sir, My cousin had sold a property on 23rd September, 2020. He was suggested by his CA that he should invest the amount in LTCG Exemptions bonds 54EC within 6 months. Due to unavoidable circumstances he could not invest in bonds earlier. Today he tried to invest in REC bonds but it shows that the bonds will be allotted in April 15th, 2021 even if he invests now in those bonds. Please suggest is it beneficial to invest in REC bonds now as his 6 months period has been completed ?? Please suggest selling date is taken into account or month. Also please suggest even if he successfully make payment and submit REC bonds application till 22nd March, 2021, but if the bonds get allotted to him next month in April than will these bonds give long term capital gains tax exemption or not as it will be allotted next month. In all this confusion my cousin is skeptical to invest now as he feels if his deadline of 6 months has been met than he better not invest in bonds. Also please suggest other ways how to save LTCG Tax in case he cannot invest in bonds now due to end of 6 months period !! Thanks in advance
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The amount should be invested within a period of 6 months from the date of transfer.
2) The investment in the long term specified assets by an assessee during the Financial Year cannot exceed INR 50 Lakhs.
3)
The eligible bonds are:
4) your cousin would get benefit of exemption if he makes investment by 22nd March 2021
1. All categories of persons are eligible to avail exemption benefit under section 54EC of the Income Tax Act.
2. Section 54EC exemption is available only towards the capital gain arisen on account of transfer of long term capital asset (being land or building or both).
3. The assessee has invested the amount of capital gain (wholly or partly) in the long term specified assets.
4. The amount should be invested within a period of 6 months from the date of transfer.
5. The investment in the long term specified assets by an assessee during the Financial Year cannot exceed INR 50 Lakhs.
6. The investment in the long term specified assets by an assessee (from the capital gain arising from the transfer of one or more land or building or both) cannot exceed INR 50 Lakhs during the financial year in which the land or building or both is transferred and in the subsequent financial year.
Mr. ABC purchase a house property on 01.04.2002 for Rs 5,00,000. He sells the house on 15.11.2019 for Rs 2,00,00,000. He purchases bonds of NHAI which are redeemable after 5 Years as under: –
(i) On 15.03.2020 – Rs 50,00,000 (FY 2019-20)
(ii) On 15.04.2021 – Rs 50,00,000 (FY 2020-21)
In the above example, The capital gain for Assessment Year 2020-21 shall be as under :
Period of Holding (2002 to 2019) : Long-term.
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.
