Investment u/s 54EC cannot be made till 30.06.2020 for sale of asset before 20.09.2019

Recently an ordinance was passed by Ministry of finance extending various due dates amid corona virus pandemic.

In this ordinance it was also mentioned that due date for making investment u/s 54 to 54GB has been extended to 30.06.2020, extracts of same are as under:

“The date for making investment/ construction/ purchase for claiming roll over benefit/ deduction in respect of capital gains under sections 54 to 54GB of the IT act has also been extended to 30th June 2020. Therefore, the investment/ construction/ purchase made upto 30.06.2020 shall be eligible for claiming deductions from capital gains arising during FY 2019-20.”

On bare reading of the above ordinance one can assume that due date for any capital gain investment due in FY 2019-20 has been extended to 30.06.2020 and hence if one has sold an asset on 01.04.2019 and wanted to invest in Bonds u/s 54EC can now do so till 30.06.2020.

However that’s not the case because one needs to do a combine reading of this ordinance as well as the press release on 24.03.2020 wherein it was clearly mentioned that any installments or payments which were becoming due between 20.03.2020 to 29.06.2020 shall only be extended to 30.06.2020 and same is mentioned in point no. 4 of the press release.

Therefore in case you have made sale of a land or building or both before 20th September 2019 and you were thinking of investing in Bonds u/s 54EC then there’s a bad news for you as this extension won’t help you, as due date for making investment in bonds u/s 54EC for any sale before 20th September 2019 would expire on 19th March 2020, (as investment u/s 54EC needs to be made within 6 months of sale) and which is before the date mentioned in Press release.

Hence, the above extension will not be applicable in your case.

Similarly for any other investment like construction or purchase of house where 2 or 3 years is counted from date of sale and if such date expires on 19.03.2020 you won’t get benefit of such extension.

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