Mr. A earned a capital gain of ₹ 100 lakhs on 1-2-2014 from the sale of a long term capital asset (land) within the limits of Jaipur corporation. If he invests ₹ 60 lakhs, out of ₹ 100 lakhs, in Rural Electricity Corporation Bonds approved under Sec. 54 EC in 20-2-2014, what is the amount of exemption he can claim under Sec. 54 EC of Income Tax Act for the AY 2014-15 ?
₹ 50 lakhs
Section 54EC exempts long-term capital gains on transfer of any long-term capital asset (such as land) to the extent the gain is invested in specified bonds of NHAI or REC within six months of the transfer.
The exemption is the lower of the long-term capital gain and the amount invested in the bonds: here ₹ 100 lakhs gain and ₹ 60 lakhs invested, so the lower figure is ₹ 60 lakhs.
But the proviso to Section 54EC(1) limits the investment eligible for exemption to ₹ 50 lakhs in a financial year; the whole ₹ 60 lakhs was invested within the financial year 2013-14.
Exemption = \(\min(100,\ 60,\ 50)\) = ₹ 50 lakhs, and the balance capital gain of ₹ 50 lakhs remains taxable for AY 2014-15.
Hence, the answer is ₹ 50 lakhs.
Similar Questions
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Tax audit is compulsory in the case of a person carrying on profession and whose gross receipts exceeds which one of the following?
Which are the appropriate tax planning perspectives in case of shutdown or continued decision under the Income Tax Act, of 1961?
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B. The loss-making company and profit-making company may merge to avail of the tax benefit
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D. The condition of section 80 IB / 80 IC of the Act, a deduction is allowed for such undertaking
E. If a person has more than one business, the loss-making business may not be discontinued.
Choose the most appropriate answer from the options given below:
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