Tax exemption facility on capital gains in 2007-08 too
January, 02nd 2007
Investors with long-term capital gains from sale of immovable property can breathe easy.
The Finance Ministry has indicated that even in the next fiscal, investors would get the facility of parking such gains in government approved bonds to avail themselves of tax exemption on long-term capital gains.
Currently, this facility is available under Section 54EC of the income-tax law. This provision provides tax exemption on capital gains arising from the transfer of a long-term capital asset if such gains are invested in notified bonds.
"As of today, there is no likelihood of the discontinuance of the facility available under Section 54EC. After March 31, 2007 another scheme will be there (whereby bonds of certain companies would be specified for next fiscal)", Mr A.K. Sinha, CBDT spokesperson, said here on Monday.
For 2006-07, the Central Board of Direct Taxes (CBDT) has, till date, notified bonds for Rs 8,000 crore from Rural Electrification Corporation (REC) and Rs 1,500 crore from the National Highway Authority of India (NHAI). These resources have to be mobilised by March 31, 2007.
By September 2006, REC raised Rs 4,500 crore and NHAI raised Rs 1,500 crore. The CBDT did not anticipate that these would be fully subscribed by September itself.
Last week, the CBDT notified additional bonds for Rs 3,500 crore from REC to meet the need for more such bonds and also to help REC mobilise more resources. REC wanted to mobilise Rs 8,000 crore in fiscal 2006-07 through such bonds, Mr Sinha said.
Unlike earlier years, where the bond offerings were open-ended, the Government has, for the current fiscal, decided to cap the value of bonds to ensure that money is mobilised by only those companies who needed it.
Meanwhile, Mr Sinha said that direct tax collections in the current fiscal would exceed budget estimates by at least Rs 10,000 crore.
In Budget 2006-07, the direct tax collections estimate was pegged at about Rs 2,10,000 crore