What is capital gains tax saving bonds?
- 8 Comment
Introduction
In my previous articles I have explained about the capital gains and suggested few ideas to save the tax arising from the capital gains. In this article I will write down another suggestion to save the capital gains tax. If you have any doubts post it in the comments section. Please subscribe to our future articles here.
Capital Gains Tax Saving Bonds
- If you are selling any of your land or property, which results in the capital gains. There is 20% tax deducted for the capital gains. It is good time you should seriously think about saving that money.
- Investors who have capital gains and want to save tax arising on this gain, can use the capital gains tax saving bonds for this specific purpose only. However, the income arise out of this bonds are not tax-free. You have to pay the tax for that.
- If you have long-term capital gains on sale of a property or gold: you’ll save tax by investing in this bond.
- For example if you have made the capital gains of Rs.300000. If you are not planning to save the capital gains tax, you have to pay Rs.60000 as the tax. But, if you are investing the whole or part of that amount in the capital gains tax saving bonds, you need not pay the tax for that invested amount.
- The gain has to be long-term in nature. Only then can the Section 54EC bond be used. It cannot be used to save short-term capital gains.
- You need to invest into the bonds within six months from the date of the transfer of the asset.
- You can invest a maximum of Rs 50 lakh in the bonds, so there is a restriction on the amount that can be claimed as a benefit.
Summary
I hope this article would be very useful for those who want to save the capital gains tax. If you have any doubts please post it in the comments section. I will answer your questions. Thank you for reading!!
Subscribe to our future articles here.
Related posts:
8 Comments on this post
Trackbacks
-
Manshu said:
Thanks for the tip, very useful.
December 7th, 2009 at 6:04 pm -
VIJAY said:
HAI, I WANT TO INVEST FUND IN AGRICULTURAL LAND WHICH IS FROM SALE OF 3 YR OLD PROPERTY. WHAT IS MY TAX LIABILITY ?
January 28th, 2010 at 5:36 am -
R P Mukherjee said:
I am planning to sale my equity shares in a company. it will earn capital gain @ Rs. 40.00 crore. how can i save tax this capital gain.
February 4th, 2010 at 4:28 am -
mangesh said:
can i keep capital gain bond as colateral security to bank to avil loan
February 14th, 2010 at 9:49 am -
sjain said:
If we invest in the tax saving bonds..how long do we have to stay invested in them?
April 30th, 2010 at 10:25 am -
RAMANATH said:
I ( My name only ) purchased Residential property in 1989 – 90 for Rs 80000. On 7th April 2010 , I sold the property for 75 Lakhs .
On 06th May 2010 , I inevsted Rs 50 Lakhs ( Rs 25 Lakhs in REC and Rs 25 Lakhs in NHAI Capital Gains Bonds )
Now , I am left with Rs 25 Lakhs
Currently myself & mywife jointly owns a Flat , which was purchased in 2001 at Rs 9 Lakhs
Can I invest the Balance Rs 25 Lakhs in SBI Capital Gains Account and Can I purchase within 3 years , one more property in my name or jointly with my wife ?? , does this help me in not paying Capital Gains for Rs 25 Lakhs ??
May 7th, 2010 at 9:53 pm -
Sharat.Deshpande said:
Sir, My residential plot was acquired by Government. After deuctionof indexed cost the Capital Gains 1s about Rs12,50,000.
Can I invets the amount in SBI capital gain Tax saving Bonds . Afetr edemption after 3/5 yrs is the invested amount liable for Capital gain tax?August 9th, 2010 at 6:11 am -
Sharat.Deshpande said:
Sir, My residential Plot purchsed in 1986 was acquired by Governmentin 2010.. After deduction of Indexed cost the Captial gain comes to about Rs.12,50,000. If I invest this or lesser amount say 11,00,000 in SBI Capital Gain Tax Saving bond of 3 or 5?yrs will the principal amount of Rs 12,50,000 or 11,00,000 as the case may be be exempt from capital gain Tax. Is it laible to be taxed as income during the year ofr Redemption. Secondly will I be free to spend/Invest it wherever I desire?
Deshpande.August 9th, 2010 at 6:18 am
