Limit of capital gain bonds tax exemption

Question

Dear Sir,

I have sold residential land for Rs. 1.25 crore in February 2011. I understand that this income is subject to capital gains tax. I want to buy the tax exempt bonds. Can I buy 50 lacs worth bonds of REC before March 31, 2011 and another 50 lacs worth bonds of NHAI after March 31, 2011 but before August 2011. This is because my 6 month time limit falls into two financial years. This way , can I save tax on Rs 1 crore and pay tax on the remaining 25 lacs. If this is the case could you please provide the relevant act or circular of the income tax.

Pankaj Batra · Accepted Answer

There is a limit of 50 lacs on investment in Capital gain bond per financial year. But if you invest 50 lacs each in two financial years, that's allowed, but both investment must be within 6 months of property sale.

There is no rule which says that maximum 50 lakhs is only exempted in case investment is done in capital gains bonds. There is only limit on investment of 50 lakhs per financial year.

There is no rule in income tax which stops it, that means its allowed. Silence in financial rules means approval.

Limit of capital gain bonds tax exemption

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