TaxTMI 
TaxTMI 
whether investment in rec bonds u/s54ec can be encashed on death of the holder by legal heirs before maturity.
Encashment of rec bonds u/s 54ec
09 Nov 2009 
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Taxability of premature 54EC bond encashment under section 45: legal heirs liable for tax in the year of encashment.
Premature encashment of bonds acquired under the specified investment provision causes loss of exemption and results in taxability under the capital gains provision. The tax is triggered in the year the holding-period condition is violated; therefore proceeds encashed by legal heirs on the holder's death before maturity are taxable in that year. (AI Summary)
Premature encashment of bonds acquired under the specified investment provision causes loss of exemption and results in taxability under the capital gains provision. The tax is triggered in the year the holding-period condition is violated; therefore proceeds encashed by legal heirs on the holder's death before maturity are taxable in that year. (AI Summary)