In the Union Budget 2018, the finance minister normal
to expansion the lock-in period of expenditure in capital gain tax disbursement
bonds (under section 54EC of the Income Tax Act, 1961) to 5 years. In the Union
Budget 2017, the government had said it would announce more commercial equipment
to save tax on capital gains. However, instead of new products, the present
lock-in period of 3 years for 54EC bonds has been proposed to increase to 5
years. Given that the lock-in period or regime of an investment plays an
important role in conclusive whether it makes sense to invest in or not, let’s
look at whether a longer lock-in period could deter investors from investing in
these bonds to save taxes. Also, if one does not provide in them, what are the
other options for planning your capital gains?
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