"If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:(a) Maintain books of account as per Section 44AA, and(b) Get his accounts audited under Section 44AB."
“If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to: (a) Maintain books of account as per Section 44AA, and (b) Get his accounts audited under Section 44AB.”
1. Who Can Opt for Section 44AE? As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to: ✅ Eligible Assessees: Individuals Hindu Undivided Families (HUFs) Partnership firms (excluding LLPs) Companies ✅ Eligible Business: The assessee must be engaged in the busRead more
1. Who Can Opt for Section 44AE?
As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to:
✅ Eligible Assessees:
Individuals
Hindu Undivided Families (HUFs)
Partnership firms (excluding LLPs)
Companies
✅ Eligible Business:
The assessee must be engaged in the business of plying, hiring, or leasing goods carriages.
✅ Vehicle Ownership Limit:
The taxpayer must not own more than 10 goods vehicles at any time during the previous year.
2. Who is NOT Eligible for Section 44AE?
🚫 The following categories are NOT eligible for Section 44AE:
Persons owning more than 10 goods vehicles at any time during the financial year.
Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.
Businesses other than plying, hiring, or leasing goods carriages.
Taxpayers who wish to declare lower income than the prescribed presumptive income – They must maintain books of account under Section 44AA and get an audit under Section 44AB, if applicable.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE. ✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE. ❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
1. Understanding Presumptive Taxation Under Section 44AE Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time dRead more
1. Understanding Presumptive Taxation Under Section 44AE
Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time during the financial year.
Under this scheme, the taxable income is deemed and is calculated as follows:
For Heavy Goods Vehicles (HGV) (More than 12,000 kg Gross Vehicle Weight)
₹1,000 per ton per month or part thereof
For Other Vehicles (Light/Medium Goods Vehicles)
₹7,500 per vehicle per month or part thereof
2. Can Deductions Be Claimed Under Section 44AE?
🚫 No, deductions under Sections 30 to 38, including depreciation, cannot be separately claimed.
As per Section 44AE(3):
“Any deduction under Sections 30 to 38 shall be deemed to have been already given effect to and no further deduction shall be allowed.”
Thus, no separate deductions for expenses like fuel, driver salary, repair & maintenance, insurance, or depreciation are allowed since these are assumed to be covered in the presumptive income.
✅ However, the following deductions are allowed:
(a) Salary and Interest to Partners (For Partnership Firms)
If the assessee is a partnership firm, it can claim deduction for remuneration and interest paid to partners as per Section 40(b), subject to limits.
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4): 🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme. ✅ Example:A transporter owning 6 trucks oRead more
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4):
🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme.
✅ Example: A transporter owning 6 trucks opts for Section 44AE and declares income as per the prescribed method. In this case, he is not required to maintain books of account.
Exception – When Books of Accounts are Required
A person opting out of Section 44AE and declaring a lower income than the presumptive amount must:
Maintain books of account as per Section 44AA.
Get the books audited under Section 44AB, if total income exceeds the basic exemption limit.
❌ Example: A transporter has 8 trucks but declares an income less than ₹7,500 per truck per month (for light vehicles). Since the income is lower than the presumptive scheme, he must maintain books of account and get an audit done if his total income exceeds ₹2,50,000 (or the applicable exemption limit).
Conclusion
✅ Books of account are NOT required if income is declared as per Section 44AE. ❌ Books of account are required if a lower income than prescribed is declared.
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses. 2. Applicability of Section 44AE The scheme applies to: Individuals, HUFs, FirRead more
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses.
2. Applicability of Section 44AE
The scheme applies to:
Individuals, HUFs, Firms (excluding LLPs), and Companies engaged in the business of plying, hiring, or leasing goods carriages.
Businesses owning not more than 10 goods vehicles at any time during the financial year.
3. Presumptive Income Calculation (Deemed Income)
Under Section 44AE(2):
For Heavy Goods Vehicles (HGV) (Gross Vehicle Weight >12,000 kg) → ₹1,000 per ton per month or part thereof.
For Other Vehicles → ₹7,500 per month per vehicle.
4. Advance Tax Liability Under Section 44AE
Unlike regular businesses, persons opting for Section 44AE are liable to pay advance tax in a single installment by 15th March of the financial year.
Legal Provisions
As per Section 211(1)(b) read with Section 44AE, taxpayers under presumptive taxation schemes (including Section 44AE) are not required to pay advance tax in four installments.
Instead, the entire advance tax liability must be paid on or before 15th March of the financial year.
If tax is not paid by 15th March, it can still be paid by 31st March, but delay may attract interest under Sections 234B and 234C.
Hi, Reinvesting your capital gains into another capital asset can be highly beneficial because it allows you to defer or even reduce your tax liability. Here’s how it works: Tax Exemption/Deferral: By reinvesting your gains into a qualifying asset (such as residential property under Section 54 or otRead more
Hi,
Reinvesting your capital gains into another capital asset can be highly beneficial because it allows you to defer or even reduce your tax liability. Here’s how it works:
Tax Exemption/Deferral: By reinvesting your gains into a qualifying asset (such as residential property under Section 54 or other assets under Section 54F of the Income Tax Act), you can claim an exemption on the tax that would otherwise be payable on your capital gains. This means you keep more of your money working for you rather than handing it over as tax.
Enhanced Investment Growth: Deferring the tax liability means that the full amount of your gains is available for reinvestment. This boosts your capital, allowing for potentially higher returns over time through compounding.
Improved Cash Flow: Since you’re not required to pay the tax immediately, you retain liquidity and can allocate funds strategically across different assets or opportunities.
Long-Term Financial Planning: Utilizing these exemptions effectively supports a more tax-efficient investment strategy, helping you build wealth over the long term without unnecessary tax erosion.
Yes, profit earned from the sale of land, building, or both is chargeable to Capital Gains Tax under the Income Tax Act, 1961. However, the tax treatment depends on the holding period of the asset: 1️⃣ Type of Capital Gain: ✔ Short-Term Capital Gain (STCG): If the land/building is sold within 24 monRead more
Yes, profit earned from the sale of land, building, or both is chargeable to Capital Gains Tax under the Income Tax Act, 1961. However, the tax treatment depends on the holding period of the asset:
1️⃣ Type of Capital Gain:
✔ Short-Term Capital Gain (STCG):
If the land/building is sold within 24 months from the date of purchase, the profit is treated as short-term capital gain (STCG).
Taxable as per your income tax slab rate.
✔ Long-Term Capital Gain (LTCG):
If the land/building is held for more than 24 months, the profit is classified as long-term capital gain (LTCG).
Taxed at 20% with indexation benefit under Section 112.
Closing a Capital Gains Account Scheme (CGAS) account requires following the proper procedure, especially when only interest remains. Since your branch manager has requested Form G with the Assessing Officer's (AO) endorsement, here’s the step-by-step guide to get it: Step 1: Prepare Form G Form G iRead more
Closing a Capital Gains Account Scheme (CGAS) account requires following the proper procedure, especially when only interest remains. Since your branch manager has requested Form G with the Assessing Officer’s (AO) endorsement, here’s the step-by-step guide to get it:
Step 1: Prepare Form G
Form G is the prescribed form under the Capital Gains Accounts Scheme, 1988, for closing the account and withdrawing the remaining funds. You need to fill out the form with: ✅ Your personal details (Name, PAN, Address, Account No.) ✅ Bank details where the capital gain account is held ✅ Reason for closure (In your case, only interest remains) ✅ Details of amount already disbursed and remaining balance
Step 2: Approach Your Jurisdictional Assessing Officer (AO)
Visit the AO’s office with: 📄 Duly filled Form G 📄 Passbook/Statement of your CGAS account 📄 Copy of PAN Card 📄 Copy of Last ITR filed 📄 Bank’s request letter (if any)
Step 3: Obtain AO’s Endorsement
Submit Form G along with documents to the AO.
The AO will verify whether the capital gain amount was utilized as per the exemption rules.
If satisfied, they will endorse and sign Form G, permitting closure.
Step 4: Submit to the Bank
After getting AO’s approval, submit the endorsed Form G to your bank.
The bank will process the closure and release the remaining interest amount (after TDS deduction, if applicable).
Ensure you take the final statement from the bank for your records.
Key Points to Note
✔️ Timelines may vary depending on AO’s workload, so follow up if needed. ✔️ Interest earned is taxable as per your income slab. ✔️ If you face delays, you may escalate the matter with your jurisdictional Principal Commissioner of Income Tax (PCIT).
Once done, your Capital Gains Account will be officially closed, and you can use the interest as per your requirement. ✅
Yes, there are specific bonds available under the Income Tax Act that allow you to invest your capital gains and claim tax relief. One of the primary avenues is provided under Section 54EC of the Act. How It Works: Section 54EC Bonds:If you have incurred capital gains from the sale of an asset, youRead more
Yes, there are specific bonds available under the Income Tax Act that allow you to invest your capital gains and claim tax relief. One of the primary avenues is provided under Section 54EC of the Act.
How It Works:
Section 54EC Bonds: If you have incurred capital gains from the sale of an asset, you can invest those gains in specified bonds—such as those issued by the National Highways Authority of India (NHAI) or the Rural Electrification Corporation (REC).
Tax Exemption: By investing in these bonds, you can claim an exemption from capital gains tax on the invested amount, up to a certain limit (currently ₹50 lakh per financial year).
Holding Period: These bonds are non-convertible and must be held for a minimum period, usually three years, to avail the tax benefit.
Key Points to Remember:
Investment Limit: The exemption is available up to the prescribed limit per financial year.
Purpose: This measure encourages the flow of capital into infrastructure and other government-promoted sectors.
No Other Eligible Bonds: While Section 54EC is the most common route for capital gains bonds, always review the latest provisions, as tax laws can evolve.
By investing your capital gains in these bonds, not only do you help fund critical infrastructure projects, but you also reduce your tax liability. This strategy can be an effective way to manage your taxes while supporting national development initiatives.
What provision will apply if a person opt for the presumptive taxation scheme of section 44ADA and declares his income from profession at lower rate (i.e. less than50%)?
"If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:(a) Maintain books of account as per Section 44AA, and(b) Get his accounts audited under Section 44AB."
“If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:
See less(a) Maintain books of account as per Section 44AA, and
(b) Get his accounts audited under Section 44AB.”
Who is eligible for presumptive taxation scheme of section 44AE?
1. Who Can Opt for Section 44AE? As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to: ✅ Eligible Assessees: Individuals Hindu Undivided Families (HUFs) Partnership firms (excluding LLPs) Companies ✅ Eligible Business: The assessee must be engaged in the busRead more
1. Who Can Opt for Section 44AE?
As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to:
✅ Eligible Assessees:
Individuals
Hindu Undivided Families (HUFs)
Partnership firms (excluding LLPs)
Companies
✅ Eligible Business:
The assessee must be engaged in the business of plying, hiring, or leasing goods carriages.
✅ Vehicle Ownership Limit:
The taxpayer must not own more than 10 goods vehicles at any time during the previous year.
2. Who is NOT Eligible for Section 44AE?
🚫 The following categories are NOT eligible for Section 44AE:
-
-
-
-
See lessPersons owning more than 10 goods vehicles at any time during the financial year.
Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.
Businesses other than plying, hiring, or leasing goods carriages.
Taxpayers who wish to declare lower income than the prescribed presumptive income – They must maintain books of account under Section 44AA and get an audit under Section 44AB, if applicable.
Can a person who owns more than 10 goods vehicles adopt the presumptive taxation scheme of section 44AE?
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.
See less✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.
❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
Can we claim any deduction while calculating taxable business Income as per the presumptive taxation scheme of section 44AE?
1. Understanding Presumptive Taxation Under Section 44AE Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time dRead more
1. Understanding Presumptive Taxation Under Section 44AE
Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time during the financial year.
Under this scheme, the taxable income is deemed and is calculated as follows:
For Heavy Goods Vehicles (HGV) (More than 12,000 kg Gross Vehicle Weight)
₹1,000 per ton per month or part thereof
For Other Vehicles (Light/Medium Goods Vehicles)
₹7,500 per vehicle per month or part thereof
2. Can Deductions Be Claimed Under Section 44AE?
🚫 No, deductions under Sections 30 to 38, including depreciation, cannot be separately claimed.
As per Section 44AE(3):
Thus, no separate deductions for expenses like fuel, driver salary, repair & maintenance, insurance, or depreciation are allowed since these are assumed to be covered in the presumptive income.
✅ However, the following deductions are allowed:
(a) Salary and Interest to Partners (For Partnership Firms)
If the assessee is a partnership firm, it can claim deduction for remuneration and interest paid to partners as per Section 40(b), subject to limits.
(b) Deductions Under Chapter VI-A (E.g., Section 80C, 80D, 80G, etc.)
Even though business expenses are not allowed, the taxpayer can claim deductions under Chapter VI-A against gross total income. These include:
Section 80C – LIC, PPF, ELSS, etc.
Section 80D – Health insurance premiums
Section 80G – Donations to eligible charities
Section 80U – Deduction for disabled individuals
3. Exception – When Deductions Can Be Claimed
If the taxpayer declares lower income than prescribed under Section 44AE, he must:
-
-
See lessMaintain books of account as per Section 44AA
Get them audited under Section 44AB if total income exceeds the basic exemption limit
👉 In such cases, actual expenses and deductions can be claimed.
If a person adopts the presumptive taxation scheme of section 44AE, then is he required to maintain books of account as per section 44AA?
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4): 🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme. ✅ Example:A transporter owning 6 trucks oRead more
Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4):
🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme.
✅ Example:
A transporter owning 6 trucks opts for Section 44AE and declares income as per the prescribed method. In this case, he is not required to maintain books of account.
Exception – When Books of Accounts are Required
A person opting out of Section 44AE and declaring a lower income than the presumptive amount must:
Maintain books of account as per Section 44AA.
Get the books audited under Section 44AB, if total income exceeds the basic exemption limit.
❌ Example:
A transporter has 8 trucks but declares an income less than ₹7,500 per truck per month (for light vehicles). Since the income is lower than the presumptive scheme, he must maintain books of account and get an audit done if his total income exceeds ₹2,50,000 (or the applicable exemption limit).
Conclusion
✅ Books of account are NOT required if income is declared as per Section 44AE.
See less❌ Books of account are required if a lower income than prescribed is declared.
What is the liability of advance tax in case of presumptive taxation scheme of section 44AE?
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses. 2. Applicability of Section 44AE The scheme applies to: Individuals, HUFs, FirRead more
Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses.
2. Applicability of Section 44AE
The scheme applies to:
Individuals, HUFs, Firms (excluding LLPs), and Companies engaged in the business of plying, hiring, or leasing goods carriages.
Businesses owning not more than 10 goods vehicles at any time during the financial year.
3. Presumptive Income Calculation (Deemed Income)
Under Section 44AE(2):
-
-
-
-
-
-
See lessFor Heavy Goods Vehicles (HGV) (Gross Vehicle Weight >12,000 kg) → ₹1,000 per ton per month or part thereof.
For Other Vehicles → ₹7,500 per month per vehicle.
4. Advance Tax Liability Under Section 44AE
Unlike regular businesses, persons opting for Section 44AE are liable to pay advance tax in a single installment by 15th March of the financial year.
Legal Provisions
As per Section 211(1)(b) read with Section 44AE, taxpayers under presumptive taxation schemes (including Section 44AE) are not required to pay advance tax in four installments.
Instead, the entire advance tax liability must be paid on or before 15th March of the financial year.
If tax is not paid by 15th March, it can still be paid by 31st March, but delay may attract interest under Sections 234B and 234C.
What is the benefit of re-investment of capital gain in any other capital asset?
Hi, Reinvesting your capital gains into another capital asset can be highly beneficial because it allows you to defer or even reduce your tax liability. Here’s how it works: Tax Exemption/Deferral: By reinvesting your gains into a qualifying asset (such as residential property under Section 54 or otRead more
Hi,
Reinvesting your capital gains into another capital asset can be highly beneficial because it allows you to defer or even reduce your tax liability. Here’s how it works:
-
-
-
-
See lessTax Exemption/Deferral: By reinvesting your gains into a qualifying asset (such as residential property under Section 54 or other assets under Section 54F of the Income Tax Act), you can claim an exemption on the tax that would otherwise be payable on your capital gains. This means you keep more of your money working for you rather than handing it over as tax.
Enhanced Investment Growth: Deferring the tax liability means that the full amount of your gains is available for reinvestment. This boosts your capital, allowing for potentially higher returns over time through compounding.
Improved Cash Flow: Since you’re not required to pay the tax immediately, you retain liquidity and can allocate funds strategically across different assets or opportunities.
Long-Term Financial Planning: Utilizing these exemptions effectively supports a more tax-efficient investment strategy, helping you build wealth over the long term without unnecessary tax erosion.
Whether profit earned from sale of land or building or both chargeable to capital gain tax?
Yes, profit earned from the sale of land, building, or both is chargeable to Capital Gains Tax under the Income Tax Act, 1961. However, the tax treatment depends on the holding period of the asset: 1️⃣ Type of Capital Gain: ✔ Short-Term Capital Gain (STCG): If the land/building is sold within 24 monRead more
Yes, profit earned from the sale of land, building, or both is chargeable to Capital Gains Tax under the Income Tax Act, 1961. However, the tax treatment depends on the holding period of the asset:
1️⃣ Type of Capital Gain:
✔ Short-Term Capital Gain (STCG):
If the land/building is sold within 24 months from the date of purchase, the profit is treated as short-term capital gain (STCG).
Taxable as per your income tax slab rate.
✔ Long-Term Capital Gain (LTCG):
-
-
See lessIf the land/building is held for more than 24 months, the profit is classified as long-term capital gain (LTCG).
Taxed at 20% with indexation benefit under Section 112.
I want to close my capital gain account. The capital gain amount is already disbursed and only interest is lying in account. The branch manager asked for Form G with AO’s endorsement on it. How to get it? Please advise procedure?
Closing a Capital Gains Account Scheme (CGAS) account requires following the proper procedure, especially when only interest remains. Since your branch manager has requested Form G with the Assessing Officer's (AO) endorsement, here’s the step-by-step guide to get it: Step 1: Prepare Form G Form G iRead more
Closing a Capital Gains Account Scheme (CGAS) account requires following the proper procedure, especially when only interest remains. Since your branch manager has requested Form G with the Assessing Officer’s (AO) endorsement, here’s the step-by-step guide to get it:
Step 1: Prepare Form G
Form G is the prescribed form under the Capital Gains Accounts Scheme, 1988, for closing the account and withdrawing the remaining funds. You need to fill out the form with:
✅ Your personal details (Name, PAN, Address, Account No.)
✅ Bank details where the capital gain account is held
✅ Reason for closure (In your case, only interest remains)
✅ Details of amount already disbursed and remaining balance
Step 2: Approach Your Jurisdictional Assessing Officer (AO)
Find out who your AO is by checking the Income Tax Department’s e-filing portal https://www.incometax.gov.in.
Visit the AO’s office with:
📄 Duly filled Form G
📄 Passbook/Statement of your CGAS account
📄 Copy of PAN Card
📄 Copy of Last ITR filed
📄 Bank’s request letter (if any)
Step 3: Obtain AO’s Endorsement
Submit Form G along with documents to the AO.
The AO will verify whether the capital gain amount was utilized as per the exemption rules.
If satisfied, they will endorse and sign Form G, permitting closure.
Step 4: Submit to the Bank
After getting AO’s approval, submit the endorsed Form G to your bank.
The bank will process the closure and release the remaining interest amount (after TDS deduction, if applicable).
Ensure you take the final statement from the bank for your records.
Key Points to Note
✔️ Timelines may vary depending on AO’s workload, so follow up if needed.
✔️ Interest earned is taxable as per your income slab.
✔️ If you face delays, you may escalate the matter with your jurisdictional Principal Commissioner of Income Tax (PCIT).
Once done, your Capital Gains Account will be officially closed, and you can use the interest as per your requirement. ✅
See lessWhether interest received on amount deposited in capital gain account under capital gain account scheme is taxable?
Yes, there are specific bonds available under the Income Tax Act that allow you to invest your capital gains and claim tax relief. One of the primary avenues is provided under Section 54EC of the Act. How It Works: Section 54EC Bonds:If you have incurred capital gains from the sale of an asset, youRead more
Yes, there are specific bonds available under the Income Tax Act that allow you to invest your capital gains and claim tax relief. One of the primary avenues is provided under Section 54EC of the Act.
How It Works:
Section 54EC Bonds:
If you have incurred capital gains from the sale of an asset, you can invest those gains in specified bonds—such as those issued by the National Highways Authority of India (NHAI) or the Rural Electrification Corporation (REC).
Tax Exemption:
By investing in these bonds, you can claim an exemption from capital gains tax on the invested amount, up to a certain limit (currently ₹50 lakh per financial year).
Holding Period:
These bonds are non-convertible and must be held for a minimum period, usually three years, to avail the tax benefit.
Key Points to Remember:
Investment Limit:
The exemption is available up to the prescribed limit per financial year.
Purpose:
This measure encourages the flow of capital into infrastructure and other government-promoted sectors.
No Other Eligible Bonds:
While Section 54EC is the most common route for capital gains bonds, always review the latest provisions, as tax laws can evolve.
By investing your capital gains in these bonds, not only do you help fund critical infrastructure projects, but you also reduce your tax liability. This strategy can be an effective way to manage your taxes while supporting national development initiatives.
See less