Capital gain tax exemption is now a bit easier! Under income tax law, a tax payer can save on capital gain tax on sale of a long term capital asset by claiming exemption under section 54 or section 54F or section 54EC of Income Tax Act and others. Readers may also read earlier posting on section 54EC under Long term capital gain exemption u/s 54EC simplified in six steps ! Briefly, the provision under section 54EC provides that if the amount of capital gain is deposited in the specified bonds -NHAI or REC – notified for the purpose of section 54EC , the capital gains shall be exempt from tax to the extent the gain was invested in the specified bonds.
One of the conditions given in section 54EC of Income Tax Act is that exemption is available if “invested the whole or any part of capital gains in the long-term specified asset” . The starting lines of section 54EC is given for ready reference :