The maximum exemption available under section 54EC by investing capital gains from transfer of a building in notified bonds is:
ARs 50 lakhs
BRs 1 crore
CRs 2 crore
DRs 10 crore
Answer & Solution
Correct answer: A. Rs 50 lakhs
1. Section 54EC exempts LTCG on transfer of land or building (or both) invested in specified 5-year redeemable bonds such as NHAI and RECL within 6 months of transfer.
2. The investment eligible for exemption is capped at Rs 50 lakhs per transfer, counting investments made in the year of transfer and the subsequent financial year together.
3. Hence the exemption can never exceed Rs 50 lakhs, however large the gain.
_Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 4 Capital Gains, PDF p. 74_
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