Time limit extended for tax benefit under Sec 54EC: Fin Min

New Delhi, June 30 (UNI) The Finance Ministry today extended till December 31 the time limit for investment of long term capital gains realised between January 1 and June 30, 2006 for availing of tax exemption under Section 54EC of the Income Tax Act.

The time limit has been extended till September 30 for such gains made between September 29, 2005 and December 31, 2005.

The extensions have been announced due to the non-availability of bonds issued by the Rural Electrification Corporation (REC) and National Highways Authority of India (NHAI), the Central Board of Direct Taxes said.

Section 54EC of Income-tax Act, 1961, provides tax exemption on capital gains arising from the transfer of a long-term capital asset, if such capital gains are invested in certain bonds within a period of six months after the date of such transfer.

With effect from April 1 this year, such gains can be invested only in the notified bonds of REC and NHAI.

Bonds of REC and NHAI, to be issued during Financial Year 2006-07, were notified by Central Government yesterday for Rs 4,500 crore and Rs 1,500 crore respectively.

Due to non-availability of these bonds immediately, some persons would not be able to avail of benefit under section 54EC, and for some other persons the effective time available for making the investment is less than six months.

With a view to removing the hardship caused to taxpayers, CBDT issued an order under section 119(2)(c) of Income Tax Act, 1961 extending the time limitation for making the investments under section 54EC.

UNI SN PA VV1847