To save on capital gains tax, you can invest Rs 40 lakh in a tax-saving bond. As per regulations, you have to invest in these bonds within six months from sale of the property but not beyond the due date for furnishing income tax returns.

What is the limit for long term capital gain?

Adjustment of Long-term Capital Gain (Exemption) The exemption limit is Rs. 5,00,000 for resident individual of the age of 80 years or above. The exemption limit is Rs. 3,00,000 for resident individual of the age of 60 years or above but below 80 years.

Did you make an investment under section 54?

Rs. (*) Exemption under section 54 will be lower of following : Amount of capital gains arising on transfer of residential house, or. Investment in new residential house property….Computation of capital gains for the financial year 2021-22.

How is long term capital gain calculated?

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where: Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Can I claim 54 and 54F?

Sections 54 and 54F of the Income Tax Act, allow one to claim exemption from tax on long-term capital gains, if the same is used for the purchase or construction of a house within specified time limits.

Can a long term capital gain be exempt from section 54EC?

Should these bonds be either transferred or redeemed for cash, then the capital gain amount invested by the assessee in these bonds will not long be eligible for exemption under Section 54EC, and will be considered as long-term capital gain acquired during the year prior to the transfer or redemption of such bonds.

What is the maximum amount of investment under section 54EC?

As per the provisions outlined under Section 54EC, the maximum amount of investment that an assessee can make in long-term specified assets or bonds mentioned under Section 54EC, cannot be more than Rs 50 lakhs over the duration of a financial year.

Why to invest in capital gain bonds 54 EC?

Why to invest in 54 EC bonds? The gains that arise on the sale of a Long Term Capital Gain Asset are known as Long Term Capital Gains and Capital Gains Tax is levied on such gains. However, such tax can be saved if this amount is invested in capital gain bonds specified under section 54 EC. Which bonds are eligible under the Section 54 EC?

When to use section 54EC of the Income Tax Act?

Provisions under section 54EC provide exemption capital gain arisen on transfer of Long Term Capital Assets (whether land or building or both) when the amount is invested in specified bonds. This article discusses provisions of Sec 54EC of the Income Tax Act.