look news india
The Union Budget to be presented next month is likely to provide cheap loans to two major state-owned companies, the Indian Renewable Energy Development Agency (IREDA) and the Housing and Urban Development Corporation Ltd (HUDCO).
The government has considered this under Section 54EC of the Income Tax Act. Once these two public sector companies come under this section, investors will be able to buy their bonds, which will be exempt from capital gains tax. The interest rates on such bonds will be much lower than the bond market. A government official said that this entire exercise has been done to help the Modi government achieve its ambitious goals of solar power generation and affordable housing. The Finance Ministry has currently sought additional information from IREDA and HUDCO regarding inclusion under Section 54EC.
It may be noted that Section 54EC of the Income Tax Act exempts any long-term capital gains (LTCG) received on the sale of immovable assets such as land and house, provided that the public sector company has been notified under this section and the money has been invested. Must be done in such a company. Rural Electrification Corporation Limited (REC) and Power Finance Corporation (PFC) are currently eligible for this exemption. LTCG on asset sale is taxed at Rs 20, which leads to significant tax liability. Of course, the exemption under Section 54EC can provide relief to taxpayers from the tax burden. Investment in bonds specified under Section 54EC must be made within six months of the sale of the immovable property and the amount invested cannot be redeemed before five years.
