Can one buy 54 EC BOND To save LTCG on silver or gold sell
Yes, investing in 54EC bonds can help save on long-term capital gains (LTCG) tax, but it’s specifically available for gains from the sale of long-term capital assets like land or buildings. Unfortunately, the tax exemption under Section 54EC doesn’t apply to LTCG from the sale of gold, silver, or other movable assets.
For long-term capital gains (LTCG) from the sale of gold or silver, there are no direct reinvestment options specifically designed for tax exemption. However, a few alternative strategies might help reduce or defer tax liabilities:
- Section 54F – Investment in Residential Property:
If you have LTCG from selling gold or silver, you can reinvest the entire sale proceeds (not just the gains) in a residential property to claim an exemption under Section 54F. Keep in mind:
- The exemption is proportionate. If you reinvest only part of the sale proceeds, the exemption will apply proportionally.
- You must not own more than one other residential property on the date of transfer.
- You need to purchase the property within 1 year before or 2 years after, or construct within 3 years after the date of transfer.
- Offsetting Capital Losses: If you have capital losses (either short-term or long-term) from other investments like stocks, mutual funds, or property, you can offset these losses against your LTCG on gold or silver to reduce your taxable gains.
- Capital Gains Account Scheme (CGAS): If you plan to reinvest in a residential property but haven’t yet identified the property, you can deposit the gains in a CGAS account before the due date for filing your tax return. This deposit preserves your exemption eligibility, giving you time to complete the purchase/construction of the property.
- Diversified Investment Planning:
Tax-efficient investments such as equity-linked savings schemes (ELSS) or specific fixed deposits for tax saving (under Section 80C) can help reduce overall tax liabilities.