Section 54EC Video Lecture | Income Tax for assessment (Inter Level) - Taxation

Ans. Section 54EC is a provision under the Indian Income Tax Act that allows individuals to claim tax exemption on capital gains by investing in specified bonds within a specified period. This provision helps individuals reduce their tax liability on capital gains by investing in eligible bonds.

Ans. The key features of Section 54EC are as follows: - It allows individuals to claim tax exemption on long-term capital gains by investing the proceeds in specified bonds issued by NHAI and REC. - The investment in these specified bonds must be made within six months from the date of transfer of the capital asset. - The maximum investment allowed under this section is Rs. 50 lakhs in a financial year. - The specified bonds have a lock-in period of three years, during which they cannot be transferred or pledged. - The interest earned on these bonds is taxable.

Ans. No, Section 54EC is applicable only for long-term capital gains. Short-term capital gains are not eligible for tax exemption under this provision. To claim tax exemption on short-term capital gains, you may explore other provisions such as Section 54F or Section 54B, depending on the nature of the asset.

Ans. Yes, apart from investing in specified bonds within the prescribed time frame, there are a few other conditions and restrictions to claim tax exemption under Section 54EC. Some of them include: - The investment in specified bonds must be made by the individual and not by any other person. - The investment amount cannot exceed the capital gains arising from the transfer of the capital asset. - The specified bonds cannot be redeemed or converted into money before the completion of the lock-in period of three years. - If the individual transfers or converts the specified bonds into money within three years, the tax exemption claimed will be revoked, and the capital gains will become taxable.

Ans. Yes, you can claim tax exemption under Section 54EC multiple times for different capital gains. The maximum amount that can be invested in specified bonds under this section is Rs. 50 lakhs in a financial year. Therefore, if you have multiple capital gains, you can invest the corresponding amount in specified bonds to claim tax exemption for each gain separately, as long as the total investment does not exceed the maximum limit.