What is capital gains tax saving bonds?

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!!

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