If you are planning to invest any long-term capital gains (LTCG) from sale of house property, land, building, jewellery etc. in Section 54EC bonds in order to avail tax exemption for these gains then it would be a good idea to do so by March 31, 2018. Here's why.
If you have sold a house during the financial year 2017-18, which you have held for more than two years, then the gains arising from the transaction are treated as LTCG. Such gains from selling a house are taxed at 20 per cent with indexation benefit. You can also invest LTCG from sale of jewellery, debt mutual funds etc., held for more than three years, in these bonds to save on paying tax on them.
Here, one must remember that capital gains from sale of immovable properties such as land, building or house property, will qualify as long-term only if they are held for at least two years. In case of other assets such as jewellery and debt mutual funds, it must be held for at least three years for the capital gains to qualify as long-term.
Why you should invest gains before March 31
A taxpayer, who has sold a house, has the option to invest the gains to buy or construct a new property or invest it in 54EC bonds to save tax on those gains within the specified time period. LTCG tax will not be payable on the amount of gains so invested.
For refrences:
If you have sold a house during the financial year 2017-18, which you have held for more than two years, then the gains arising from the transaction are treated as LTCG. Such gains from selling a house are taxed at 20 per cent with indexation benefit. You can also invest LTCG from sale of jewellery, debt mutual funds etc., held for more than three years, in these bonds to save on paying tax on them.
 |
Here, one must remember that capital gains from sale of immovable properties such as land, building or house property, will qualify as long-term only if they are held for at least two years. In case of other assets such as jewellery and debt mutual funds, it must be held for at least three years for the capital gains to qualify as long-term.
Why you should invest gains before March 31
A taxpayer, who has sold a house, has the option to invest the gains to buy or construct a new property or invest it in 54EC bonds to save tax on those gains within the specified time period. LTCG tax will not be payable on the amount of gains so invested.
However, you should invest before 31 March, 2018, as bonds issued after this date will have to be held for a minimum of five years instead of three years for similar bonds issued till March 31, 2018. "Budget 2018 has proposed to increase the tenure of 54EC bonds from three years to five years. This proposal will come into effect from 1 April, 2018. Also, starting from FY2018-19, these bonds can only be used to save tax on LTCG accrued from land, building (house property) or both,"
Therefore, all the bonds specified under section 54EC issued on or after 1 April, 2018 will come with a tenure of five years. If the bonds are redeemed before the completion of five years, then you will lose the tax benefit.
What the present rules say
As per the income tax rules, a person can save tax on LTCG arising from sale of house property by using any of the following:
a) Either to invest those gains to buy a house within two years, or
b) Construct a house using the entire gains within three years, or
c) Invest in specified bonds under Section 54EC within six months from the date of transfer of the property sold.
As per the income tax rules, a person can save tax on LTCG arising from sale of house property by using any of the following:
a) Either to invest those gains to buy a house within two years, or
b) Construct a house using the entire gains within three years, or
c) Invest in specified bonds under Section 54EC within six months from the date of transfer of the property sold.
To know about others investment instruments:
https://weplanforfuture.blogspot.in/
https://weplanforfuture.blogspot.in/
For refrences:
Comments
Post a Comment