Good news for those who could not avail of tax benefit on long-term capital gains due to non-availability of specified bonds. The finance ministry has announced new deadlines of September 30 and December 31, 06 for availing the benefit under Section 54EC of the Income-tax (I-T) Act.
The new deadline is September 30, 06 for cases where the long-term capital asset was transferred between September 29, 05 and December 31, 05. Tax benefits could be availed up to December 31, 06 if the transfer took place between January 1, 06 and June 30, 06, the ministry said on Friday.
No tax is levied on long-term capital gains if it is re-invested in specified bonds within six months. Section 54EC of I-T Act provides for tax exemption on capital gains from the transfer of a long-term capital asset, if such capital gains are invested in certain bonds within a period of six months after the date of such transfer.
With effect from April 1,06, such gains could be invested only in the notified bonds of Rural Electrification Corporation (REC) and National Highways Authority of India (NHAI). Due to non-availability of these bonds, many people could not avail of the tax benefits under section 54EC. Some persons missed the deadline as the effective time available for making the investment was less than six months.
With a view to removing the hardship caused to taxpayers, the Central Board of Direct Taxes (CBDT), has issued an order under section 119(2)(c) of I-T Act extending the time limitation for making the investments, the statement said.
Bonds of REC and NHAI, to be issued during FY07, have been notified by the Centre on June 29, 06 for Rs 4,500 crore and Rs 1,500 crore, respectively.
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