GAMMON INDIA LIMITED

available in such a case. As per Section 112 of the ITA, taxable long-term capital gains, if any, on
sale of Equity Shares is chargeable to tax at the rate of 20% (plus applicable surcharge and
education cess).
6. As per Section 54EC of the ITA and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising on the
transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital
gains are invested in a ―long term specified asset‖ within a period of 6 months after the date of
such transfer. It may be noted that investment made on or after April 1, 2007 in the long term
specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.
However, if the assessee transfers or converts (otherwise than by transfer) the long term specified
asset into money within a period of three years from the date of its acquisition, the amount of
capital gains exempted earlier would become chargeable to tax as long-term capital gains in the
year in which the long term specified asset is transferred or converted into money. Further the cost
of such long-term specified asset will not qualify for deduction under section 80C of the act.
A ―long term specified asset‖ for making investment under this Section on or after 1st April 2007
means any bond, redeemable after three years and issued on or after the 1st April 2007 by:
National Highways Authority of India constituted under Section 3 of the National
Highways Authority of India Act, 1988; or
Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act.
7. As per Section 54F of the ITA, long term capital gains (in cases not covered under Section 10(38))
arising on the transfer of the Equity Shares held by an individual or Hindu Undivided Family
(HUF) will be exempt from capital gains tax if the net consideration is utilised, within a period of
one year before, or two years after the date of transfer, in the purchase of a residential house, or for
construction of a residential house within three years. Such benefit will not be available:
if the individual or Hindu Undivided Family-
owns more than one residential house, other than the new residential house, on the date of
transfer of the Equity Shares; or
purchases another residential house within a period of one year after the date of transfer
of the Equity Shares; or
constructs another residential house within a period of three years after the date of
transfer of the Equity Shares; and
the income from such residential house, other than the one residential house owned on the date of
transfer of the original asset, is chargeable under the head ―Income from house property‖.
If only a part of the net consideration is so invested, so much of the capital gain as bears to the
whole of the capital gain, the same proportion as the cost of the new residential house bears to the
net consideration, will be exempt.
If the new residential house is transferred within a period of three years from the date of purchase
or construction, the amount of capital gains on which tax was not charged earlier, will be deemed
to be income chargeable under the head ―Capital Gains‖ of the year in which the residential house
is transferred.
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