Encashment of NHAI bonds before maturity attracts LTCG tax on sum invested in bonds

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Published: November 6, 2019 2:14:14 AM

Section 54EC provides that if a taxpayer invests his long-term capital gains in specified bonds (i.e. NHAI bonds), then the amount of capital gains so invested shall be exempt up to the monetary ceiling of Rs 50 lakh.

NHAI bonds, LTCG tax, investment in bonds, ITR, NPS, bank FDs ,KYC norms, NPS accountAn NRI between the age of 18 – 60 years, as on the date of submission of his/her application and complying with the extant KYC norms, can open an NPS account.

*I sold my flat in January 2019 and invested in NHAI bonds under Section 54EC in July 2019. Can I go for premature withdrawal and buy a new flat?
– Jitendra Shah

Section 54EC provides that if a taxpayer invests his long-term capital gains in specified bonds (i.e. NHAI bonds), then the amount of capital gains so invested shall be exempt up to the monetary ceiling of Rs 50 lakh. These specified bonds should not be transferred or withdrawn or converted into money at any time before the expiry of five years from the date of its investment otherwise the amount of capital gains arising from the transfer of original asset which were not charged to tax, will be deemed to be the long-term capital gains of the previous year in which specified assets are transferred and shall thus be brought to tax.

* My grandfather has filled ITR successfully for AY 2019-20 but he has not filled his ITR for AY 2018-19. Is there any way of filing late ITR for AY 2018-19 now? If yes, please advise.
—Rupali Gorivale

In view of the provisions of Section 139, any person who has not furnished a return of income till the due date can furnish the same at any time before the end of the relevant assessment year (i.e., March 31, 2019 in your case) upon payment of fee for late filing of return. In your case, the time limit to file the return of income for AY 2018-19 has expired. Further, as per the Act, losses can only be carried forward, if income tax return is filed before the due date. Resultantly, the corresponding losses shall lapse and shall not be allowed to be carried forward to subsequent years.

*Is it wise for an 35-year-old NRI to invest in NPS rather than in bank fixed deposit? Is it safe and convenient to invest in NPS by an NRI?
—Deepak

An NRI between the age of 18 – 60 years, as on the date of submission of his/her application and complying with the extant KYC norms, can open an NPS account. However, only an individual account can be opened in NPS and not a joint account whereas bank FDs can be made jointly. Both NPS and bank FDs are safe and convenient options for NRIs. Hence, you have to choose the appropriate scheme based on the rate of return/ other factors that you are expecting.

The writer is director, Nangia Advisors (Andersen Global). Send your queries to fepersonalfinance@expressindia.com

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