Capital gains - REC Bonds extended
As per Section 54EC of Income-tax Act, 1961, capital gains arising from the transfer of a long-term capital asset are exempted, if such capital gains are invested in the notified bonds of Rural Electrification Corporation Ltd. (REC) and National Highways Authority of India (NHAI).
In June 2006, REC and NHAI were allowed to issue bonds for Rupees 4,500 crores and Rupees 1,500 crores respectively during Financial Year 2006-07. These bonds were fully subscribed in August 2006 with the result that now there is no bond to invest in if you have capital gains and you want the exemption.
Now the government has allowed REC to issue additional bonds for an amount of Rs. 3,500 crores during the period from 26th December, 2006 to 31st March, 2007, subject to the conditions that:-
(i) a person who has made an investment of an amount aggregating more than fifty lakhs rupees in the bonds of REC and NHAI notified on 29.06.2006 shall not be allotted any bond out of bonds of Rs. 3,500 crores.
(ii) in case of any other person, the aggregate of investment in the bonds of Rs. 3,500 crores and the investment, if any, in the bonds of REC and NHAI notified on 29.06.2006 shall not exceed fifty lakhs rupees.
Further, to remove the hardship caused to taxpayers because of non-availability of the bonds, the Central Board of Direct Taxes, has issued an order extending the time limitation for making the investments under section 54EC up to 31.3.2007 in case of persons where the long-term capital asset was transferred between 29.09.2005 and 30.09.2006 (both dates inclusive).
NOTIFICATION NO. , Dated : December 22, 2006