Clause - 027 - Amendment of section 54EC.

THE FINANCE BILL, 2017

Clause 27 of the Bill seeks to amend section 54EC of the Income-tax Act relating to capital gain not to be charged on investment in certain bonds.

The existing provisions contained in clause (ba) of subsection (3) of the said section define long-term specified asset for making any investment under the said section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956.

It is proposed to amend the said clause (ba) so as to include any other bond as notified by the Central Government in this behalf.

This amendment will take effect, from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years.

 

Capital gains exemption expanded to include government notified bonds, widening eligible investments for deferring tax on long term gains. Amendment to section 54EC broadens the definition of qualifying instruments by allowing the Central Government to notify additional specified bonds beyond the previously listed redeemable bonds, thereby expanding the range of investments that can be used to claim the capital gains exemption; the amendment takes effect from the stated commencement and applies to the indicated assessment year and subsequent years.