Long Term Capital Gain:
If an asset was held for more than one year, then sold for a gain, is a Long Term Capital Gain(LTCG) includes conversion of capital asset into stock in trade.
Tax Rate:
Taxed at the rate of 20%.
Scheme:
Income tax act allows deduction in respect of LTCGs if invested in Long Term Specified Assets Long Term Specified Assets:
Any bond issued by
National Highway Authority of India
Rural Electrification Corporation Limited
Quantum of Deduction:
Case 1: If the amount invested in specified asset >= Capital gain then entire capital gain is exempt
Case 2: If the amount invested in specified asset < Capital gain then to the extent of amount invested
Maximum to the extent of INR 50 Lacs
Conditions For Availing Exemption:
The investment has to be made within a period of 6 months from the end of the month in which the transfer takes place.
The specified asset should not be transferred within a period of 3 years from the date of investment
Consequences of Conversion/transfer of new assets (before 3 years):
Shall be treated as income of the year in which it is transferred and charged to capital gain tax.
Taking loan/advance against the security of the new asset would amount to conversion of new asset into money.
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