#section 54ec

Investing in Capital Gain Bonds allows you to save taxes under 54EC Section Income Tax Act 1961. This section allows investors to save their Long-Term Capital Gains (LTCG) tax simply by reinvesting their profits in bonds within 6 months of the sale of their property.

Capital Gain Bonds help an investor to avoid huge capital gains taxes on the sale of real estate. These bonds allow an investment of up to Rs 50,00,000 every financial year, providing a secure and stable investment option. It is also important to note that the principal amount invested will help in tax savings, but the interest earned on these bonds is taxable.

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Investors have the opportunity to avail tax exemption on capital gains as per Section 54EC of the Income Tax Act, 1961, by opting for 54EC capital gain bonds. These bonds provide a means to save on long-term capital gains arising from the sale of property, provided the investment is made within six months of the property sale. The maximum allowable investment in these bonds is Rs. 50,00,000 per financial year. As of April 1st, 2023, the interest rate on these bonds has increased to 5.25% per annum. It's crucial to note that the interest earned on these bonds is liable to income tax.

Rural Electrification Corporation (REC):

Minimum Investment: Rs. 20,000

Return on Investment (ROI) per annum: 5.25%

Rating: AAA

Interest Credit Date: 30th June

Indian Railway Finance Corporation (IRFC):

Minimum Investment: Rs. 20,000

Return on Investment (ROI) per annum: 5.25%

Rating: AAA

Interest Credit Date: 15th October

Power Finance Corporation (PFC):

Minimum Investment: Rs. 20,000

Return on Investment (ROI) per annum: 5.25%

Rating: AAA

Interest Credit Date: 31st July

Brief Synopsis of Capital Gain Exemption u/s 54, 54EC & 54F

CA Rohit R Sharma

Hello Everyone,

As we had discussed about the taxation rules on sale of immovable property, in the article on Capital Gain on Immovable Property we are here to understand the benefits that can be claimed under section 54, 54EC & 54F to save tax on long term capital gains.

At the time of sale of any Long term Capital Asset, the gain is taxed at a steep rate of flat 20%. In order…

Section 54 benefit available to Assessee on Flat Purchased in wife/Daughters name

Shirish Vinayak Godbole Vs. ITO (ITAT Pune), ITA No. 1320/PN/2010 dated 13-02-2013

In the instant case, the assessee sold his residential property for a consideration of Rs.  50 lakhs and purchased two flats, one flat for his self occupation and another flat for a consideration of Rs. 29,60,000 in the name of his wife for the residence of his wife and daughter. (more…)

Partnership firm eligible for Sec. 54EC benefit despite investment in Individual name of Partners

M/s. Chakrabarty Medical Centre vs. TRO (ITAT Pune), ITA No. 2277/PN/2012, Assessment Year : 2008-09, Date of pronouncement : 30-01-2015

Issue- Whether the assessee firm can get the benefit of Sec. 54EC, even though an investment in respect of capital gain is made by the two partners individually in the notified securities e. bonds issued by the Rural Electrification Corporation Ltd. (RECL)? (mo…

Budget 2014 – Exemption U/s. 54EC cannot exceed Rs. 50 Lakh despite investment in two Years

Capital gains exemption on investment in Specified Bonds

The existing provisions contained in sub-section (1) of section 54EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, within a period of six months, invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested…

Make acquisition of more than one house eligible for exemption u/s 54 – ICAI

Section 54- Investment in residential house

Several disputes are in existence as to whether an assessee can buy more than one house under provisions of section 54 of the Income-tax Act, 1961. In the recent times High Courts and ITAT have taken a consistent view that in order to avail the exemption u/s 54 of the Act, investment in a “residential house” is required to be made. Here a residential…