Income Tax: LTCG not invested in bonds u/s 54EC by ITR filing date has to be deposited in CGAS bank

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Updated: February 28, 2018 3:08:02 AM

Section 54EC provides that if an assessee invests LTCG within a period of six months from the date of transfer in specified assets (bonds of NHAI/REC) then LTCG so invested shall be exempt from tax.

LTGC, income tax, ITR filing, CGAS, capital gains account schemeLTCG not invested in bonds u/s 54EC by ITR filing date has to be deposited in CGAS in bank

LTCG not invested in bonds u/s 54EC by ITR filing date has to be deposited in CGAS in bank

* Should we deposit the Long Term Capital Gain (LTCG) funds arising out of a sale in March to Capital Gains Account Scheme, 1988 within the financial year? Or do we have six months’ time till September to invest in bonds u/s 54EC?
– Anurag Malhotra

Section 54EC provides that if an assessee invests LTCG within a period of six months from the date of transfer in specified assets (bonds of NHAI/REC) then LTCG so invested shall be exempt from tax. However, if the gains are not so invested up to the date of submission of return of income (July 31 in case of individuals), then one should deposit the money in “Capital Gain Account Scheme” (CGAS) with a nationalised bank. The proof of deposit should be submitted along with return of income. Therefore, you must deposit the amount in CGAS if you fail to invest in the prescribed bonds before the due date of return. This deposited amount must be utilised for the purchase of the bonds by September if you wish to claim exemption under Section 54EC.

* I am serving in Indian Army. I get technical allowances and field allowance with my monthly income. Please tell me on which payment do I need to pay income tax?
—Rishi Handa

An individual salaried employee who gets a Compensatory Field Area Allowance, on being employed in Arunachal Pradesh, Manipur Sikkim, Nagaland, HP, UP and J&K, the said allowance shall be exempt up to Rs 2,600 per month. The same is limited to Rs 1,000 per month if he is employed in Punjab, Rajasthan, Haryana and West Bengal. Technical Allowance falls under the category of taxable elements of pay, hence, the same shall be fully taxable.

* I relocated to the US three years back for work. My family has received a tax notice addressed to me. I will stay abroad for at least five years. Should I pay the dues raised by I-T department?
– Vijit Iyer

An individual domiciled in India traveling outside India, is required to file an intimation with the tax authorities furnishing his PAN, purpose of visit and estimated period of stay. Regarding the tax arrears noted in the notice, once a demand notice is issued by the income tax authorities, it is recoverable from you along with the due interest for the delay in paying. Tax authorities can attach your bank accounts, etc., for recovery of dues.

The writer is partner, Nangia & Co LLP. Send your queries to fepersonalfinance@expressindia.com

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