Capital Gain exemption: Section 54 EC

Section 54 EC: Transfer Of Land Or Building And Investment In “Specified Asset”

Asset to be transferred: Land or building or both.

Asset on which capital gain to be invested: Long term specified asset.

1. ELIGIBLE ASSESSEE

  • All assessees.

2. CONDITIONS

  • The land or building transferred should be a long term capital asset.
  • The investment should be made within 6 months from the date of transfer.
  • The assessee should not transfer or convert or avail loan or advance on the security of such bonds within a period of 5 years from the date of acquisition of such bonds.

3. LONG TERM SPECIFIED ASSETS

  • Rural Electrification Corporation Limited or REC bonds.
  • National Highway Authority of India or NHAI bonds.
  • Any other bond notified by Central Government in the Official Gazette.
    • Bonds issued by PFC (Power Finance Corporation Ltd).
    • Tax savings bonds issued by IRFC (Indian Railways Finance Corporation Limited).

4. AMOUNT OF EXEMPTION

  • Amount invested in specified assets (or) capital gain (or) 50 lakhs (whichever is less)

5. WITHDRAWAL OF EXEMPTION

  • The capital gain bonds should not be converted into cash within a period of five years from the date of purchase.
  • In case transferred or converted or availed loan or advance on such bonds before the expiry of 5 years, the amount so invested on which tax exemption was claimed, shall be taxable as long-term capital gain in the year of transfer/conversion.
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