To accommodate those who could not avail themselves of this provision

Our Bureau

New Delhi, July 2

The Finance Ministry has extended the time limit for making investments under Section 54EC of the Income Tax Act.

This provision provides tax exemption on capital gains arising from the transfer of a capital asset, if such capital gains are invested in certain bonds within a period of six months after the date of such transfer.

Capital asset transfer

The Central Board of Direct Taxes (CBDT) has now said that investments in bonds (recognised under Section 54EC) can be made up to September 30in the case of persons whose long-term capital asset was transferred between September 29, 2005 and December 31, 2005 (both days inclusive).

For persons whose long-term capital asset was transferred between January 1and June 30(both days inclusive), the CBDT has said that investments in recognised bonds can be made up to December 31for availing themselves of the Section 54EC benefits.

Bonds scarcity

The Finance Ministry's move to extend the time limit comes in the wake of representation that some persons could not avail themselves of Section 54EC benefits due to non-availability of bonds and for some other persons the effective time available for making the investment was less than six months.

Earlier this year, the Centre had said that Section 54EC benefits would be available, with effect from April 1only when the capital gains are invested in notified bonds of rural electrification corporation Ltd (REC) and National Highways Authority of India (NHAI).

The bonds of REC and NHAI to be issued during the financial year 2006-07 have been notified by Central Government on June 29for Rs 4,500 crore and Rs 1,500 crore respectively.

(This article was published in the Business Line print edition dated July 3, 2006)
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