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Capital Gains Bond Investment Loophole Plugged: Only 50 Lakhs Allowed to Offset Gains

One more tax loophole in Capital Gains has been bridged. Now, you can only invest your long term capital gain in certain bonds (54EC, like NHAI bonds) upto Rs. 50 lakh.

Earlier, if you sold a house in, say November, you had six months to buy these bonds. Every financial year, you could only buy Rs. 50 lakh worth of such bonds. So you could buy Rs. 50 lakh worth bonds in March (five months later) and then another Rs. 50 lakh in April (six months later).

Since the financial year ends in March, you could claim an exemption of Rs. 50 lakh for two years, taking your exemption amount to Rs. 1 crore.

This has been strongly plugged.

Now, if you sell an asset this year, then the total investment in capital gains bonds, in this year and the next, put together, can only be Rs. 50 lakh.

My view: When I heard about the abuse, I almost started clapping slowly. There are no moral aspects to tax planning of course. They’ll just have to find other loopholes.

  • Piyush says:

    But why should there cfa cap of 50 lacs in the first place itself…
    At one place it says its main motto is infrastructure development…given the fact that there is no specific allocation for NHAI and Rural Electricity Programme, why should it have a cap on 50 lacs…

  • Amit says:

    AOs have previously been known to deny the multiple 50L purchases claiming “tax-evasion”. Wasnt easy earlier, and now, officially closed.