Capital Gain Exempt if invested in specified Bonds under section 54EC

There are many gains which are not exempted from tax. High percentage of Income tax is payable on various Capital assets sold if it is held more than 36 months as Long term capital gain. After going through this section, certain amount of capital gain can be saved from being taxable.

Exemption criteria :

1. Available to all assesse.

2. Only can claim exemption on Long term Capital Gain (profit) on capital assets.

3. Even If the asset sold is depreciable asset but held more than 36 months, can claim long term capital gain exemption under section 54EC.

4. The amount earned on sale of capital asset should be invested within 6 months from the date of sale in specified bonds.

Amount exempted

For determining the amount to be claimed as exemption shall be lower of amount of Capital Gain or Cost of Investment made in specified Bonds.

Maximum Amount:

The maximum limit of Investment that can be allowed is upto Rs. 50 Lakhs.

Investment Ways in specified Bonds :

To claim exemption amount of gain should be invested in the bonds issued by National Highways Authority of India (NHAI), Rural Electrification Corporation Limited (REC) which are redeemable only after 3 years.

As per amendment in Budget 2017 Valid from 1.4.2018, any bonds as notified by Government will be considered valid for investment to claim capital gain exemption.

Reversal of Exemption :

The amount claimed as Exemption will be Taxable as Capital gain in the respective year on conversion of


1. If any finance or loan is taken against such Bonds it will not be exempted and shall be taxable on granting of loan.

2. If the Investment made is not secured for 3 years and redeemed before completion of 3 years. So any capital gain taxable can be invested in a productive or safer zone and claim exemption too. This is kind of boon or one plus one free scheme.