NHAI, REC bonds give tax relief
Tax Matters
A person had made capital gains by selling the house property, after owning it for 10 years of its construction. In order to avoid long term capital gains tax, does he need to invest in the total sale value in NHAI bonds or invest only the amount of gains arrived at using inflation index? According to Section 54 EC, if the capital gains (after indexation) — arising from the transfer of a long-term capital asset —will be exempt if the assessee within a period of six months invests such gains in capital gains bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation Ltd (REC).
You could also invest the capital gains in the residential property or invest in long-term capital gains scheme.
It is also pertinent to note that the amount of investment in the National Highways Authority of India or Rural Electrification Corporation bonds cannot exceed `50 lakh. I have been regularly paying insurance premium in the name of my wife for the last five years. But I am not filing her income returns because her income is below the taxable limit. I have been informed that I will not be eligible to claim deduction under Section 80C of the Income Tax Act, on the insurance premium paid by me on the insurance policy taken in her name, since she is not an income tax assessee. Is this true? If so, will I have any problems for the deduction claimed by me over the years? According to Section 80C, the life insurance premium paid by an individual, at any time during the previous year, qualifies for deduction, if such premium is paid by an individual on his/her life or on the life of his/her spouse or on the life of any children. It is not at all necessary that the person on whose life the premium is paid should be an income-tax assessee.
The requisite as per law is that the premium paid by the assessee is on the life of specified persons.
Hence, you will not have any problem in respect of deduction claimed by you for earlier years as well.