As per Section 54EC of the Income Tax Act, the taxpayer can choose to invest the amount of long term capital gain (LTCG), arising on the sale of land or building or both, in the bonds that are issued by the National Highways Authority of India (NHAI) and other government notified bonds.
With regard to the said exemption under Section 54EC, recently NHAI issued a notification.
In a letter dated 31st March 2022, NHAI notified the discontinuance of capital gain bonds issued under Section 54EC of the Income Tax Act. The said discontinuance has come into effect from 1st April 2022.
It is stated in the letter that the Government of India, in its Internal and Extra-Budgetary Resources report for the financial year 2022-23, has not mandated NHAI to raise funds from the market. Therefore, NHAI shall not issue 54 EC Bonds and any other debt instruments/Bonds, etc.
The authority has also asked the financial institutions in the said letter to disconnect the payment links for NHAI bonds. Also, the authority requested all the collecting banks to freeze credit in collection accounts opened with those banks for Section 54EC bonds, with effect from 1st April 2022, so as to ensure that no amount of application money invested for seeking allotment of bonds on or after 1st April 2022 is credited to these accounts.
The field officers, associates, and brokers are also requested not to accept any fresh application for Section 54EC bonds and application money intended for allotment, with effect from 1st April 2022 onwards.
It is advisable for all taxpayers now to opt for other options to claim capital gain exemptions. You can read about all the capital gain tax exemptions available as per Income Tax Act by clicking here.
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