We Design Your Financial Destiny


(Precious) Words of Wisdom : "Never spend your money before you have earned it." ~ Thomas Jefferson

Govt. plugs Sec 54EC loophole

Once I had written about how you can 'Get Exemption from paying Capital Gains Tax' as per the provisions of section 54 of the Income Tax Act.

As you may recollect, under section 54EC gains on sale of capital assets such as property are exempt from tax provided you meet certain specified conditions. 



These provisions include 
a) you have been holding the property for more than 3 years (termed as long term capital gains); 
b) the gains are invested in specified bonds issued by REC / NHAI within a period of 6 months from the date of sale; and
c) the investment in these bonds in any financial year does not exceed Rs.50 lakhs.

The wording ‘in any financial year’ was creating an ambiguity.

A person selling his property between Oct and Mar in any financial year was able to claim tax exemption up to Rs.1 crore. He was investing the capital gains up to a sum of Rs.50 lakhs in the financial year in which he sold the property and the balance gains up to another Rs.50 lakhs in the next financial year. He had to only ensure that both investments were completed within the deadline of 6 months.

This was not the intention of the Govt. when it provided this tax relief.

Accordingly, in its budget for 2014-15, the Govt. has plugged this loophole. An amendment to section 54EC will now state that the investment in the specified capital gains exemption bonds, in the year in which the sale takes place and in the subsequent financial year, will not exceed Rs.50 lakhs.

In other words, the Govt. has removed the ambiguity in the wordings of sec 54EC which was being exploited by the taxpayers. 

An Investment In Knowledge Pays The Best Interest ~ Benjamin Franklin

101 Classic Tips Money Gyaan

You Learn A Lot By READING... And Even More By SHARING.

Share Button

Ignorance is like a SIGNED BLANK CHEQUE... anyone can MISUSE it.

Subscribe via Email
Powered by Blogger.

... Three VALUABLE Tips ...

1. Which Is The Best Day To Invest Your Money?
Best Day for Investment
My "unique" take on the auspicious days to make the best investments.

 


2. Housewives Too Can Become Millionaires
Millionaire housewives with compounding
Saving for MORE TIME gives much better results than saving MORE MONEY.

 


3. Twist In Credit Card Interest Calculations You Must Know
Credit Card Interest Calculation
Calculating Finance Charge on your Credit Card is LOT SIMPLER than this.