Long term capital gain bonds

This query is : Resolved

Dr. Y I Patel (Querist)
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05 May 2013 Can i buy 6% LTCG bonds issued by NHAI to avoid capital gain tax payable on sale of unlisted shares??
Is there any other investment apart from house property for such purpose??

CA Alexandar Gazi

CA Alexandar Gazi (Expert)
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05 May 2013 Dr. Y I Patel,

If sold unlisted shares were a long term capital assets (holding period more than 12 months)in your hands, you can buy 6% LTCG bonds issued by NHAI to get exemption (u/s 54EC) from tax on capital gain.

LTCG bonds should be bought within 6 months from the date of trannsfer (sale in your case) of unlisted shares (in your case) to avail benefit u/s 54EC.

Amount of exemption:
Lower of the following:or
1) The amount of capital gains generated on transfer of capital asset
or
2) The amount of investment

Remember - 6% LCCG bonds issued by NHAI should not be transferred (or converted into money or any loan/advance is taken on the security of those bonds)within three years from the date of their acquisition otherwise capital gains which were not charged to tax would be deemed to be the capital gain in the year of transfer and charged to tax accordingly.

Thanks,
Alexandar Gazi

Dr. Y I Patel

Dr. Y I Patel (Querist)
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05 May 2013 Thank u so much Mr.Gazi..
To be specific i sold Rs 10 share for Rs 30 after holding more than 12 months...
Plz correct me on following if i m wrong..
1.i will get indexation benefit..
2. I can invest Rs 10 only out of my profit for investing in ltcg bonds to get benefit...
3.i need to pay ltcg tax on Remaining amount of Rs 10 ...

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CA Alexandar Gazi

CA Alexandar Gazi (Expert)
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05 May 2013 Dr. Y I Patel,

Yes, you can get the benefit of indexation.

I mention it earlier that exemption is lower of the following two.
1) The capital gains generated
2) The amount invested

Yes, you are right you have to pay tax on remaining Rs.10.

Thanks
Alexandar Gazi