Capital gain bonds or 54EC bonds

Capital gain bonds or 54EC bonds are the fixed income instruments that provide capital gains tax exemption under section 54EC to the investors. The tax liability on long-term capital gains from sale of immovable property can be reduced by purchasing 54EC bonds.

The owner of the bonds are the debt holders or creditors of the issuer. These bonds are issued by infrastructure companies that are backed by the government. Hence, the risk factor gets mitigated by buying such bonds. The capital gain bonds are redeemable before maturity. One cannot sell these bonds as they are not listed in the stock exchange. The interest is reduced to 5% p.a. from 6% p.a. and are fully taxable in your hands.

 Do you know:

Q1. Who can claim exemption under section 54EC?

Ans. Any Person

Q2. Whether Short Term Capital Asset or Long-Term Capital Asset is eligible for Exemption?

Ans. Long-Term Capital Asset.

Q3. Which specific asset is eligible for exemption?

Ans. Any Long-Term capital asset (being land or building or both)

Q4. Which asset should the taxpayer acquire to avail the benefits of section 54EC?

Ans. Following are the Tax Exemptions bonds available under section 54EC, the taxpayer can acquire any of them or any combination of them to avail the benefits of section 54EC.

·         National Highways Authority of India

·         Rural Electrification Corporation

·         Power Finance Corporation Limited (as notified)

·         Indian Railway Finance Corporation Limited (as notified)

Q5. What is the time limit for acquiring such new asset under section 54EC?

Ans. Within 6 months from the date of transfer of Long-Term capital asset but in case of compulsory acquisition from the date of receipt of compensation.

Q6. What is the quantum of Exemption u/s 54EC?

Ans. The amount of investment made in the new asset or capital gain, whichever is lower.

Q7. Can exemption claimed u/s 54EC be revoke in a subsequent year?

Ans. Yes, if the new asset is transferred or it is converted into money or a loan is taken on security of the new asset within 5 years of its acquisition.

Q8. What would be consequences if the exemption is revoked?

Ans. It is going to be taxable in the year in which the default is committed considering it as a long-term capital gain.

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"Arth Sakshrta Doot” App.. Developed by the students !

 

The third year, computer engineering students of MVP’s K.B.T. College of Engineering, Nashik have developed a mobile application called "Arth Sakshrta Doot” under the guidance of Alparambha Cultural and Educational Foundation. Financial literacy in India is very low, just only 24% and many of the citizens, especially in rural area are still away from the main financial stream and related developments. This app has been developed with the noble goal of spreading the financial literacy and related awareness in the society and improving the literacy level of people. The app, which will take the users towards financial freedom will be launched on the 75th Independence Day of India !

Through this app, knowledge of various finance related topics like financial planning, various useful government schemes launched for common man, saving and investment avenues etc. can be obtained. The app has customized levels like financial literacy for general class, women,  growing minds etc. The app will help the users to keep updated with various recent happenings, news, articles, and videos in the related field. You can also test your related knowledge by appearing to  inbuilt quizzes. The articles are available in English as well as in Marathi.

 

Recognizing their social responsibility, these students have developed the app that will soon be available on the Google Play Store under the name 'Arth Sakshrta Doot'. On behalf of the Alparambha Foundation, Dr. Rupali Kulkarni and from the engineering college Principal Dr. Satish Devane and Professor Dr. Vaishali Tidake mentored the students. The team members,  Mr. Yashraj Nikam, Mr. Shrikant Dere , Mr. Yash Talele,  Mr. Hitesh Patil, Ms. Minal Main participated in this project. Everyone is hopeful that this app will definitely help in improving the financial literacy of the society.

HOW to choose Tax Regime for Assessment Year 2021-22 and onwards..- CA Rashmi Adbe

 HOW to choose Tax Regime for Assessment Year 2021-22 and onwards..

I would like to quote: - 

“BE CAREFUL WHAT YOU WISH FOR, THERE IS ALWAYS A CATCH”. ….. LAURIE HALSE 

ANDORSON This quote aptly applies to us as INDIAN Taxpayer Today. The Union Budget 2020 introduced a new personal income tax regime for individual taxpayers. It is a tax regime with various tax slabs with reduced rates. However, the option for this concessional tax regime came with a catch, as a result of it about 70 exemptions and deductions were withdrawn in the new tax regime. 

So, each one can calculate own exemptions and deductions list and then will arrive at the net taxable income. After arriving at net taxable income as per both regimes by applying tax slabs as per selected regime we will come to know the tax payable under both tax regimes and can choose the beneficial one. 

The best part is that individual who is not having business income can choose the tax regime at the time of filing of the return. Though we have selected any regime, before filing of the return we can change it at the time of filing of return. 

Let’s See 

Time, Form & Manner of Exercise of Option for Availing the Benefit of Reduced Tax Rates u/s 115BAC 

The concessional rate shall not apply unless option is exercised by the individual or HUF in the form and manner as may be prescribed

1. where such individual or HUF has no business income, along with the return of income to be furnished under sub-section (1) of section 139 of the Act; and 

2. in any other case, on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the return of income for any previous year relevant to the assessment year commencing on or after 1st April, 2021 and such option once exercised shall apply to subsequent assessment years. 

Period of Exercising Option: 

(i) An individual/HUF assessee, having no business or professional income, can exercise his option of choosing between the two tax regimes, every year, based on his entitlement of ‘specified deductions’. So, an individual/HUF assessee, having income under the heads ‘Salary’, ‘House Property’, ‘Capital Gains’ and ‘Income from Other Sources’, can opt for the new tax regime in one financial year, and can go back to the old tax regime in subsequent financial year, depending upon the circumstances and entitlement of ‘specified deductions’.

(ii) An individual/HUF assessee, having business or professional income, can opt for the new tax regime of reduced taxes with no deductions, u/s 115BAC, only once and the option once exercised, for a previous year shall be valid for that previous year and all subsequent years. 

(iii) The option of the new tax regime u/s 115BAC shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other provisions as stipulated in section 115BAC of the Income Tax Act. 

(iv) the option can be withdrawn only once where it was exercised by the individual or HUF having business income for a previous year other than the year in which it was exercised and thereafter, the individual or HUF shall never be eligible to exercise option under this section, except where such individual or HUF ceases to have any business income. 

The declaration of tax regime by employee to employer will make it easy to deduct tax as per the regime chosen by the employee. The tax saving as per any regime will differ from person to person. 

CA Rashmi Adbe