Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial

Capital Gains Bond Investment Loophole Plugged: Only 50 Lakhs Allowed to Offset Gains


One more tax loophole in Capital Gains has been bridged. Now, you can only invest your long term capital gain in certain bonds (54EC, like NHAI bonds) upto Rs. 50 lakh.

Earlier, if you sold a house in, say November, you had six months to buy these bonds. Every financial year, you could only buy Rs. 50 lakh worth of such bonds. So you could buy Rs. 50 lakh worth bonds in March (five months later) and then another Rs. 50 lakh in April (six months later).

Since the financial year ends in March, you could claim an exemption of Rs. 50 lakh for two years, taking your exemption amount to Rs. 1 crore.

This has been strongly plugged.

Now, if you sell an asset this year, then the total investment in capital gains bonds, in this year and the next, put together, can only be Rs. 50 lakh.

My view: When I heard about the abuse, I almost started clapping slowly. There are no moral aspects to tax planning of course. They’ll just have to find other loopholes.


Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial