Can you claim 54EC tax benefit twice in a year? Here’s what Rs 50-lakh limit in capital gains bonds means

Seciton 54EC exemption on capital gains bonds

Expert's Advice: Section 54EC allows taxpayers to claim an exemption on long-term capital gains arising from the sale of land and buildings if the gains are invested in capital gains bonds issued by prescribed financial institutions. Currently, REC, NHAI, PFC, RFC, HUDCO, and IREDA are authorised to issue these bonds. The investment must be made within six months of the date of sale of the asset.

There are two key restrictions on the amount that can be invested. First, there is a ceiling of Rs 50 lakhs per financial year, beyond which exemption cannot be claimed under Section 54EC for all transactions made during that year. Second, investments in these bonds during a financial year cannot exceed Rs 50 lakh for claiming exemption.

Since you have already invested Rs 50 lakh in the current fiscal, you cannot claim another Section 54EC exemption by investing an another Rs 50 lakh this year. However, because the six-month investment window extends into the next financial year, you may invest Rs 50 lakh in these bonds in the next year, provided it is within six months from the date of sale of your house. By doing so, you will comply with both investment limits and still be eligible for exemption.