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Should I Invest 34 Lacs or 13 Lacs in 54EC Bonds?

Ramalingam

Ramalingam Kalirajan  |8291 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 24, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Feb 23, 2025Hindi
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Hi sir Sir i purchased property in 2007 @ 11 lac Sold in feb 2025 @ 450000 My nett capital gain is 34 lac without indexation and approxy 13 lac with indexation If i want to buy 54ec bonds than what amount will be invested 34 lac or 13 lac

Ans: You need to invest only the indexed capital gain (approx. Rs 13 lakh) in 54EC bonds to claim exemption under Section 54EC of the Income Tax Act.

Explanation:
54EC bonds exemption is available only on the LTCG (Long-Term Capital Gain) after indexation when selling a property.
Since your indexed capital gain is Rs 13 lakh, this is the amount you need to invest in NHAI/REC/PFC/IRFC 54EC bonds within 6 months from the sale date to claim tax exemption.
Maximum investment allowed in 54EC bonds is Rs 50 lakh per financial year.
Alternative:
If you do not invest in 54EC bonds, you can:

Reinvest the full capital gain (Rs 13 lakh) in another property under Section 54.
Pay LTCG tax at 20% (Approx. Rs 2.6 lakh tax on Rs 13 lakh gain).

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Feb 24, 2025 | Answered on Feb 25, 2025
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Thanks... Thats only need a clearty in new Tax systen that bond will be taken for 13 lac or 30 lac
Ans: You need to invest only Rs 13 lakh (the indexed capital gain) in 54EC bonds to claim exemption.

The new tax system does not change this rule. Exemption under Section 54EC applies only to the LTCG after indexation.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Mar 13, 2025 | Answered on Mar 14, 2025
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Whats the diff between 194IA(R). And 194IA(P) in tds section Kindly reply
Ans: Section 194IA(R) and 194IA(P) refer to different aspects of TDS on property transactions:

194IA(R): TDS on the receipt of payment by the seller.
194IA(P): TDS on the payment made by the buyer.
Both sections deal with TDS at 1% on property transactions above Rs 50 lakh.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Mar 15, 2025 | Answered on Mar 18, 2025
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Hi I am holding debt mutual fund Bought in 2017 for rs 50 lac now current value ia 75 lac If i sell @ invest all 75 lac rs in purchase of plot then is tax become zero
Ans: No, your tax will not become zero.

In the case of debt mutual funds, capital gains are not eligible for exemption under Section 54, which applies only to property sales.

Since you bought in 2017, the entire Rs 25 lakh gain (Rs 75 lakh - Rs 50 lakh) will be taxed as per your income tax slab under the new tax rules for debt mutual funds.

Buying a plot will not give you any tax exemption on debt mutual fund gains.

Best Regards,

K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Mar 18, 2025 | Answered on Mar 21, 2025
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I bought in 2017....so will I pay 20% Tax after indexation na?
Ans: No, under the new tax rules, indexation benefits are not available for debt mutual funds. The entire Rs 25 lakh gain will be taxed as per your income tax slab.

Best Regards,

K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Mar 28, 2025 | Answered on Mar 29, 2025
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Hi I have bought flat in 1988 @ rs 1 lac And as per cerificate property value is 5 lac in 2001 And ibam going to selll it @ 22 lac in may 2025 then what will be my tax liability on it
Ans: Your capital gain will be calculated using the Indexed Cost of Acquisition (ICOA) based on the 2001 valuation of Rs. 5 lakh. After indexation, the Long-Term Capital Gain (LTCG) will be taxed at 20% after applicable deductions. You can reduce tax by reinvesting under Section 54 (buying another property) or Section 54EC (bonds).

Best Regards,

K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Mar 31, 2025 | Answered on Apr 01, 2025
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Sir what will the long term capital gain amount Pls calculate I am waiting
Ans: For a precise tax strategy, please consult a qualified CA one on one to ensure compliance and tax efficiency.

Best Regards,

K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8291 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 26, 2024

Asked by Anonymous - Jun 03, 2024Hindi
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Money
Recently I sold two properties, which are one in joint name with my wife on which I got net 27 lacs (after prepayment of home loan of 27 lac), and another in my wife's name from which we got 10 lacs. Now my queries are: 1. I don't want to buy any property, so how to calculate the capital gain on both properties. By when I have to buy the bond. 2. What could best investment for the balance amount (capital gains bond amt)? (I am 46 years' service personal, in family wife and daughter 15 years in class X, our total monthly income around 1.6 lac. we have saving around 30 lac PF, 1.25 lac PPF, 5 lac NPS, 10 lac MF and 1 lac Shares). This investment for long term, I can take medium risk.
Ans: Property in Joint Name
Net Proceeds: Rs. 27 lacs
Prepaid Home Loan: Rs. 27 lacs
Calculate capital gains on your share.
Property in Wife's Name
Net Proceeds: Rs. 10 lacs
Calculate capital gains considering her holding period and purchase price.
Capital Gains Bonds Investment
Timeline
You need to invest in capital gains bonds within six months. This helps save on capital gains tax.

Bond Selection
Invest in government-approved capital gains bonds. They offer a safe way to defer taxes.

Best Investment Options for Balance Amount
Diversified Equity Funds
Equity Funds provide long-term growth. They suit your medium risk appetite.

Balanced Advantage Funds
Balanced Funds offer stability and growth. They mix equity and debt for balanced returns.

National Pension System (NPS)
You already have NPS. Consider increasing your contribution. It offers tax benefits and retirement savings.

Public Provident Fund (PPF)
PPF is a safe long-term investment. It offers tax benefits and assured returns. Increase your contributions here.

Benefits of Actively Managed Funds
Professional Management
These funds are managed by experts. They aim to outperform the market.

Higher Returns Potential
Actively managed funds often deliver better returns than index funds.

Disadvantages of Index Funds
Limited Flexibility
Index funds follow the market. They don’t adapt to market changes.

No Active Management
Index funds lack active management. This limits their growth potential.

Disadvantages of Direct Funds
Lack of Guidance
Direct funds lack professional advice. This can be challenging for investors.

Time-Consuming
Managing direct funds requires time and knowledge. This may not suit everyone.

Final Insights
Investing your capital gains wisely is crucial. Use capital gains bonds for tax savings. Diversify your remaining funds in equity, balanced funds, NPS, and PPF. Actively managed funds offer better growth. Avoid index and direct funds due to their limitations. Regularly review and adjust your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Nayagam P

Nayagam P P  |4463 Answers  |Ask -

Career Counsellor - Answered on Apr 25, 2025

Career
Sir my daughter got 90% in jee mains she can get NIT cse course sir I. Am genral category
Ans: Miranalini Madam, Here is, How to Predict Your Daughter's Chances of Admission into NIT or IIIT or GFTI After JEE Main Results – A Step-by-Step Guide.

Providing precise admission chances for each student can be challenging. Some reputed educational websites offer ‘College Predictor’ tools where you can check possible college options based on your percentile, category, and preferences. However, for a more accurate understanding, here’s a simple yet effective 9-step method using JoSAA’s past-year opening and closing ranks. This approach gives you a fair estimate (though not 100% exact) of your daughter's admission chances based on the previous year’s data.

Step-by-Step Guide to Check Her Admission Chances Using JoSAA Data
Step 1: Collect Her Key Details
Before starting, note down the following details:

Her JEE Main percentile
Her category (General-Open, SC, ST, OBC-NCL, EWS, PwD categories)
Her Preferred institute types (NIT, IIIT, GFTI)
Her Preferred locations (or if you're open to any location in India)
List of at least 3 preferred academic programs (branches) as backups (instead of relying on just one option)
Step 2: Access JoSAA’s Official Opening & Closing Ranks
Go to Google and type: JoSAA Opening & Closing Ranks 2024
Click on the first search result (official JoSAA website).
You will land directly on JoSAA’s portal, where you can enter your details to check past-year cutoffs.
Step 3: Select the Round Number
JoSAA conducts five rounds of counseling.
For a safer estimate, choose Round 4, as most admissions are settled by this round.
Step 4: Choose the Institute Type
Select NIT, IIIT, or GFTI, depending on your preference.
If she is open to all types of institutes, check them one by one instead of selecting all at once.
Step 5: Select the Institute Name (Based on Location)
It is recommended to check institutes one by one, based on her preferred locations.
Avoid selecting ‘ALL’ at once, as it may create confusion.
Step 6: Select Her Preferred Academic Program (Branch)
Enter the branches you are interested in, one at a time, in your preferred order.
Step 7: Submit and Analyze Results
After selecting the relevant details, click the ‘SUBMIT’ button.
The system will display Opening & Closing Ranks of the selected institute and branch for different categories both Home State (HS) i.e. State your daughter belongs to & also Other State (OS).
Step 8: Note Down the Opening & Closing Ranks
Maintain a notebook or diary to record the Opening & Closing Ranks for each institute and branch you are interested in, separately for HS & OS Categories for a quick reference.
This will serve as a quick reference during JoSAA counseling.
Step 9: Adjust Her Expectations on a Safer Side
Since Opening & Closing Ranks fluctuate slightly each year, always adjust the numbers for safety.
Example Calculation:
If the Opening & Closing Ranks for NIT Delhi | Mechanical Engineering | OPEN Category show 8622 & 26186 (for Home State), consider adjusting them to 8300 & 23000 (on a safer side).
If the Female Category rank is 34334 & 36212, adjust it to 31000 & 33000.

Follow this approach for Other State candidates and different categories.
Pro Tip: Adjust her expected rank slightly lower than the previous year's cutoffs for realistic expectations during JoSAA counseling.

Can This Method Be Used for JEE April & JEE Advanced?
Yes! You can repeat the same steps after your April JEE Main results to refine your admission possibilities.
You can also follow a similar process for JEE Advanced cutoffs when applying for IITs.

Want to Learn More About JoSAA Counseling?
If you want detailed insights on JoSAA counseling, engineering entrance exams, preparation strategies, and engineering career options, check out EduJob360’s 180+ YouTube videos on this topic!

Hope this guide helps! All the best for your daughter's admissions!

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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