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Bonds for saving tax on capital gains

You have highlighted the possible confusion created by Notes on Clauses in the amendment under Section 54EC and sought correction from the Government (Tax Forum of March 27, 2006). The clarification has since been issued by the Government. I suggest that it be published for the information of taxpayers.

A PIB press release dated March 30, 2006 has since referred to the amendment and issued a clarification.

The relevant extracts are given below:

"It is, therefore, clarified that tax benefit under the said section shall not be available on long-term capital gains which are invested on or after April 1, 2006 in the bonds of National Bank for Agriculture and Rural Development, National Housing Bank and Small Industries Development Bank of India.

It is further clarified that tax benefit under the said section shall be available only on those long-term capital gains which are invested on or after April 1, 2006 in the bonds of Rural Electrification Corporation Limited and National Highways Authority of India and which are notified by the Central Government in the Official Gazette".

S. RAJARATNAM

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