CMA Intermediate · Direct and Indirect Taxation · Capital Gains
Which of the following bonds qualifies as a long-term specified asset under Section 85(6) of the Income-tax Act, 2025?
The REC Limited bond redeemable after five years and issued after 1 April 2018 qualifies. Section 85(6) requires redemption after five years, issue on or after 1 April 2018, and issuance by NHAI, REC or a bond notified by the Central Government.
- AA bond of NHAI redeemable after three years, issued in 2020
- BA bond of REC Limited redeemable after five years, issued after 1 April 2018Correct
- CA bond of NHAI redeemable after five years, issued in 2016
- DA bond of a private bank redeemable after ten years, not notified
Explanation
A qualifying bond must be redeemable after five years and issued on or after 1 April 2018 by NHAI or REC, or be otherwise notified. Only the REC bond meets all conditions; the others fail on redemption period, issue date or issuer.
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