What are 54EC Capital Gain Bonds
54EC Capital Gain Bonds
are a type of financial instrument issued by specified institutions in
India. These bonds provide a tax-saving option for those who have
incurred long-term capital gains from the sale / transfer of long-term
capital assets being land, building or both. The entire capital gain
amount invested in these bonds would be exempted from tax u/s 54EC.
The
Finance Act 2017 provides that in case of an immovable property being
land or building or both, the period of holding should be 24 months or
more to qualify as long-term capital asset.
The primary purpose is
to defer the tax liability on long-term capital gains by investing the
proceeds from the sale of capital assets (land, building or both) in
these bonds. This allows taxpayers to save on capital gains tax.