To avail capital gains exemption, investment in 54 EC Capital gain bonds are to be made within 6 months. The six month period ends on 17th April. Though the investment can be made online before 17th April, allotment of bonds will be made only on the last day of the month, viz 30th April.
In such a case, will such investment qualify for capital gains exemption as allotment date is beyond the due date for investment?
Hey @Narayanan_Nagarajan,
If the purchase is made within 6 months, you can avail the exemption u/s 54EC even if the shares are allotted to you at a later date. Here’s a FAQ document for PFC bonds that explains in detail.
Hope this helps!
Thank you very much.
One more query.
To avail capital gains exemption on sale of residential property, it is proposed to purchase a new under construction flat and invest the balance in 54EC Bonds. As the payment for under construction flat will be spread over more than a year, the amount may have to be parked in capital gains account to be disbursed in stages. In such a case, is it possible to avail capital gains exemption under a) the capital accounts scheme and b) investment in 54 EC Bonds simultaneously.
Yes, you can claim exemption under section 54 and 54EC simultaneously and maximize the tax benefit.
However, remember that you need to use the amount deposited in Capital Gains Account Scheme within the time limit of 2 years (purchasing a new house property) or 3 years (constructing a new house property).
Hope it clarifies.
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Thank you very much.
One more clarification needed.
An advance payment has been made for an under construction flat and the balance amount parked in Capital gains account.
Where can we show the advance paid in Form ITR2?
Yes, the investment will qualify for capital gains exemption. The critical factor is the date of investment, not the date of allotment. If you make the investment online before the due date of 17th April, you comply with the requirement. The subsequent allotment date of 30th April does not affect your eligibility for the exemption, as the investment was made within the required six-month period. Always keep proof of the investment date for documentation purposes.
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