Govt allows REC raise additional tax free bonds of Rs 3,500 crore

New Delhi, Dec 27 (UNI) The government has allowed Rural Electrification Corporation (REC) to issue additional bonds which are tax exempt on capital gains for Rs 3,500 crore during the period December 26 to March 31,2006.

The bonds, however, are subject to certain conditions. These are (a) a person who has made an investment of of an amount aggregating more than Rs 50 lakh in the bonds of REC or National Highway Authority of India notified on June 29,-2006 will not be allotted any bond out of bonds of Rs 3,500 crore and (b) in case of any other person, the aggregate of investment in the bonds of REC and NHAI notified on June 29,-2006 will not Rs 50 lakh.

Section 54 EC of Income Tax, 1961, provides tax exemption on capital gains arising from the transfer of a long-term capital gains asset, if such capital gains are invested in the notified bonds of REC and NHAI.

Initially, REC and NHAI were allowed to issue bonds for Rs 4,500 crore and Rs 1,500 crore respectively during Financial Year 2006-07.

Since these bonds were fully subscribed to in August 2006, the Central government has allowed REC to issue additional bonds.

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