Wef AY 2001-02
Capital gain not to be charged on investment in certain bonds.
54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset, (wef AY 2019-20) being land or building or both, (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,—
Where the capital gain arises from the sale of long term capital asset , being land building or both , the asset is original asset , the assessee at any time within a period of six months after the date of sale , he has to invest whole or part of the capital gain amount in the long term specified asset , the assessee can save his capital gain tax as per the following provisions .
(a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45;
if the cost of the long term specified asset is not less than the capital gain arising from the transfer of the original asset , the whole of such capital gain shall not be charged u/s 45 of the Act .
(b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45:
if the cost of the long term specified asset is less than the capital gain arising from the transfer of the original asset ,so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the acquisition of the long term specified asset bears to the whole of the capital gain, shall not be charged u/s 45 of the Act . The percentage of cost of acquisition of the long term specified asset bears to the whole of the capital gain , the same percentage of the capital gain as bears to the whole of the capital gain shall not be charged u/s 45 of the Act .
wef AY 2007-08
Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees :
The limit for investment is Rupees Fifty Lakh on or after the 1st day of April 2007
Wef AY 2007-08
Provided further that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees.
The original asset is transferred in one financial year and the asset is purchased in the subsequent financial year shall not exceed fifity lakh rupees .
(2) Where the long-term specified asset is transferred or converted (otherwise than by transfer) into money at any time within a period of three years from the date of its acquisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1) shall be deemed to be the income chargeable under the head “Capital gains” relating to long-term capital asset of the previous year in which the long-term specified asset is transferred or converted (otherwise than by transfer) into money:
Where the long term specified asset is transferred or converted ( otherwise than transfer ) into money at any time within a period of three years from the date of acquisition . The earlier long term capital gain saved from taxation shall be deemed to be the income chargeable under the head capital gains relating to long term capital asset of the previous year in which the long term specified asset is transferred or converted into money .
Wef AY 2019-20
Provided that in case of long-term specified asset referred to in sub-clause (ii) of clause (ba) of the Explanation occurring after sub-section (3), this sub-section shall have effect as if for the words “three years”, the words “five years” had been substituted.
The period of holding of the bond is five years if purchased on or after 1.4.2018
Explanation.—In a case where the original asset is transferred and the assessee invests the whole or any part of the capital gain received or accrued as a result of transfer of the original asset in any long-term specified asset and such assessee takes any loan or advance on the security of such specified asset, he shall be deemed to have converted (otherwise than by transfer) such specified asset into money on the date on which such loan or advance is taken.
The investment is made by the assessee in any long term specified asset to save the capital gain arisen on sale of the original asset and such assessee taken any loan or advance on the security of such specified asset into money on the date on which such loan or advance is taken . He shall be deemed to have converted such specified asset into money on the date on which such advance or loan is taken .
Wef AY 2006-07
(3) Where the cost of the long-term specified asset has been taken into account for the purposes of clause (a) or clause (b) of sub-section (1),—
If the cost of the long term specified asset has been taken into account for the purposes of clause(a) or clause (b) of sub section 1
(a) a deduction from the amount of income-tax with reference to such cost shall not be allowed under section 88for any assessment year ending before the 1st day of April, 2006;
a deduction from the amount of income tax with reference to such cost shall not be allowed u/s 88 for any assessment year ending before the 1st day of April 2006
(b) a deduction from the income with reference to such cost shall not be allowed under section 80Cfor any assessment year beginning on or after the 1st day of April, 2006.
The deduction from the income for any assessment year beginning on or after the 1st day of April , 2006 shall not be allowed u/s 80C for any assessment year with respect to the cost of the specified asset
Explanation.—For the purposes of this section,—
(a) “cost”, in relation to any long-term specified asset, means the amount invested in such specified asset out of capital gains received or accruing as a result of the transfer of the original asset;
The cost is in respect of long term specified asset , means the amount invested for purchase of the specified asset out of capital gains received or accruing as a result of the transfer of the original asset .
Wef AY 2006-07 , substituted by the Finance Act 2007 wref 1.4.2006
(b)”long-term specified asset” for making any investment under this section during the period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007, means any bond, redeemable after three years and issued on or after the 1st day of April, 2006, but on or before the 31st day of March, 2007,—
The investment in long term specified asset between 1.4.2006 to 31.3.2007, means any bond, redeemable afrter three years and issued between 1.4.2006 to 31.3.2007
(i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988); or
The bonds are issued by the National Highways Authority of India .
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956),Now companies Act , 2013
or the bonds are issued by the Rural Electrification Corporation Limited .
and notified by the Central Government in the Official Gazette for the purposes of this section with such conditions (including the condition for providing a limit on the amount of investment by an assessee in such bond) as it thinks fit:
the bonds are notified by the Central Govt. with certain conditions including the condition for providing a limit on the amount of investment by an assessee in such bond .
Inserted by the Finance Act , 2007, wref 1.4.2006
Provided that where any bond has been notified before the 1st day of April, 2007, subject to the conditions specified in the notification, by the Central Government in the Official Gazette under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause;
This is a proviso which says that where any bond has been notified before the 1st day of April, 2007, subject to the conditions specified in the notification, by the Central Government in the official gazettee under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause.
Wef AY 2019-20
(ba) “long-term specified asset” for making any investment under this section,—
(i) on or after the 1st day of April, 2007 but before the 1st day of April, 2018, means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 but before the 1st day of April, 2018;
redeemable period is three years purchased between 1.4.2007 to 31.3.2018
(ii) on or after the 1st day of April, 2018, means any bond, redeemable after five years and issued on or after the 1st day of April, 2018,
Redeemable period is five years if purchased on or after 1.4.2018
by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956) (now companies act, 2013 ) or any other bond notified in the Official Gazette by the Central Government in this behalf.
The bonds are of NHAI ie National Highway Authority of India
Rural Electrification Corporation of India
Or any other bond notified in the official Gazette by the Central Government in this behalf .
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The author is not responsible for any damages if caused due to mistakes or not following the provisions strictly in the proceedings with any authority or court . This is just academic in nature and purpose . Thanks with regards.
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