Mr. A earned a capital gain of ₹ 100 lakhs from the sale of a long term capital asset (land) within the…
The Income-tax Act, 2025 continues the exemption formerly in section 54EC of the Income-tax Act, 1961: long-term capital gains arising from the transfer of land or building…
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Mr. A earned a capital gain of ₹ 100 lakhs from the sale of a long term capital asset (land) within the limits of Jaipur corporation. If, within six months of the sale and in the same tax year, he invests ₹ 60 lakhs, out of ₹ 100 lakhs, in Rural Electrification Corporation bonds specified for exemption of long-term capital gains, what is the amount of exemption he can claim under the Income-tax Act, 2025 ?
Answer and explanation
Correct answer B
The Income-tax Act, 2025 continues the exemption formerly in section 54EC of the Income-tax Act, 1961: long-term capital gains arising from the transfer of land or building are exempt to the extent invested, within six months of the transfer, in specified long-term bonds such as those of the Rural Electrification Corporation or NHAI. The eligible investment is capped at ₹50 lakh in a tax year, and at ₹50 lakh for the year of transfer and the next year taken together. Of the ₹60 lakh invested only ₹50 lakh qualifies, so the exemption is ₹50 lakh, not ₹60 lakh or ₹100 lakh.
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