CS Executive · Tax Laws and Practice · Capital Gains
Meera has long-term capital gains of Rs 40 lakh from transferring a building. Within six months she invests Rs 30 lakh in eligible REC bonds. Under Section 85 of the Income-tax Act, 2025, how much of the gain is charged to tax now?
Rs 10 lakh is charged to tax. The investment of Rs 30 lakh in the specified bonds is exempt, and under Section 85(1)(i) only the gain exceeding the investment, Rs 40 lakh less Rs 30 lakh, remains chargeable as long-term capital gains.
- ANil
- BRs 10 lakhCorrect
- CRs 30 lakh
- DRs 40 lakh
Explanation
Under Section 85(1)(i), the gain exceeding the investment is charged. Rs 40 lakh minus Rs 30 lakh gives Rs 10 lakh chargeable. Rs 30 lakh is the exempt part, not the taxable part.
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