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Capital gain tax exemption bonds (U/S 54EC): FY2024-2025

Provisions of Section 54EC (Avail Tax benefit U/s 54EC of Income tax Act)

Capital Gain Bonds are being issued as 'Long-term specified assets' within the meaning of Section 54EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under section 54EC may invest in these bonds. Read the provisions below to avail this exemption.

Provisions of Section 54EC

According to the provisions of Income Tax Act, 1961, u/s 54EC, any long-term capital gain arising from transfer of assets will be exempted in certain conditions. These conditions are:

Eligibility: The asset sold must be a Long-Term Capital Asset, held for at least 24 months before the sale.
Investments in bonds in section 54EC: The entire capital gain must be reinvested within 6 months of the transfer into eligible Section 54EC bonds.
Mandatory holding period: These bonds must be hold for the next 5 years. If they are sold or used as collateral for loan, the exemption will be revoked.
Partial investment: If the amount invested in the bonds is less than the amount realised from the sale of bonds, then the exemption will be provided in proportion to the amount invested.
Investment limit: The maximum investment limit u/s 54EC bond is ₹50 Lakh, for the current and next financial year.