Industry & Economy
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Budget
54EA/ 54EB investment must be made unrestricted
With a view to channelising investment into priority sectors of the economy and to give impetus to the capital markets, Sections 54EA and 54EB of the Income-tax Act, 1961, were introduced by the Finance Act, 1996. Under the provisions of these sections capital gains arising from the transfer of a long-term capital asset on or after 1st October, 1996, were exempted from capital gains tax if the amount of net consideration (Section 54EA) or the amount of capital gain (Sectio
n 54EB) is invested in certain specified assets, including infrastructure bonds.
While until the previous Budget, there was no limit for the capital gains investment amount, in the last Budget the Finance Minister has introduced a limit of Rs 50 lakh. I would recommend that for long-term capital gains arising out of real estate/ immoveable property sale, this limit should be removed as that will ensure that the parallel cash economy is discouraged and transactions are completely legal and accounted for. Various reports have pegged the parallel unaccounted economy of India to be almost equal to the real economy. And again given the huge capital needs for infrastructure development that the Government has across the economy, it is only logical that they encourage this capital to flow back into infrastructure and more importantly discourage the parallel economy.
K.A. Eswaran,
Retired Central Govt employee, Chennai
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