Section 54ec

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2013 applicability of 54EC,the sections read as follows:
- After 1-4-2007, the investment made in long term specified capital asset i.e bonds u/s 54EC during any financial year cannot exceed Rs. 50,00,000.
-As per clause (b)of the section 54EC,in the case the whole sale consideration is not invested and only part of the sale consideration is invested exemption shall be allowed proportionately.
Thus on plain reading of clause(b), deduction is proportionate. In other words full Rs.50,00,000 may not be available and only a proportionate investment will be available.

Kindly clarify if there is any circular which allows full Rs.50,00,000 as investment. Since ceiling is introduced in the Act, proportionate investment will not arise.

CA DHEERAJ

CA DHEERAJ (Expert)
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06 December 2013 After 01-04-2007, the investment made in the long term specified capital asset i.e bonds u/s 54EC during any financial year cannot exceed Rs. 50,00,000. Thus
investment in bonds in one financial year can be made only to the extent of Rs. 50 Lakhs
Quantum of deduction: The capital gain shall be exempt u/s 54EC only to the extent it is invested in the long term specified assets within a period of 6 months from the date of such transfer. It means if a long term capital gain arises to the tune of Rs. 110 lakh (DECEMBER 2013) and bonds u/s
54EC are purchased amounting Rs. 50 lakh UPTO MARCH 2014 AND 50 LAKH UP TO MAY 2014 )then capital gain of Rs. 100 lakh will only be exempted
u/s 54EC and the remaining capital gain of Rs. 10 lakh will be taxable.

NO PROPOSNATE PROCEDURE, IN SIMPLE WORDS
JITNA INVESTMENT KIYA 54EC MY UTNA BENEFIT MILEGA