Capital gains exemption for reinvestment in specified long term bonds, with prorated relief and recapture on early conversion. Capital gain from transfer of a long term asset is not charged if the assessee reinvests whole or part of the gain in specified long term bonds within the prescribed reinvestment period; if investment is less than the gain, exemption is proportionate. If the bond is converted into money or transferred within the retention period, the exempted amount is recharacterised as taxable long term capital gain in the year of conversion or transfer. A loan on the bond is treated as conversion, and amounts used for exemption cannot be claimed as a deduction under the related tax deduction provision.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Capital gains exemption for reinvestment in specified long term bonds, with prorated relief and recapture on early conversion.
Capital gain from transfer of a long term asset is not charged if the assessee reinvests whole or part of the gain in specified long term bonds within the prescribed reinvestment period; if investment is less than the gain, exemption is proportionate. If the bond is converted into money or transferred within the retention period, the exempted amount is recharacterised as taxable long term capital gain in the year of conversion or transfer. A loan on the bond is treated as conversion, and amounts used for exemption cannot be claimed as a deduction under the related tax deduction provision.
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