Income Tax Act, 2025
Section 5: Subs. by Act 22 of 2007, s. 18, for clause (b) (w.e.f. 12006).
5. Subs. by Act 22 of 2007, s. 18, for clause (b) (w.e.f. 12006).
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(i) by the National Highways Authority of India constituted under section 3 of the
National Highways Authority of India Act, 1988 (68 of 1988); or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered
under the Companies Act, 1956 (1 of 1956),
and notified by the Central Government in the Official Gazette for the purposes of this section with such
conditions (including the condition for providing a limit on the amount of investment by an assessee in
such bond) as it thinks fit:]
1[Provided that where any bond has been notified before the 1st day of April, 2007, subject to the
conditions specified in the notification, by the Central Government in the Official Gazette under the
provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007
(22 of 2007), such bond shall be deemed to be a bond notified under this clause;]
2[(ba) “long-term specified asset” for making any investment under this section,––
(i) on or after the 1st day of April, 2007 but before the 1st day of April, 2018, means any
bond, redeemable after three years and issued on or after the 1st day of April, 2007 but before the
1st day of April, 2018;
(ii) on or after the 1st day of April, 2018, means any bond, redeemable after five years and
issued on or after the 1st day of April, 2018, by the National Highways Authority of India
constituted under section 3 of the National Highways Authority of India Act, 1988 or by the
Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956 or any other bond notified in the Official Gazette by the Central
Government in this behalf.]
3[54ED. Capital gain on transfer of certain listed securities or unit not to be charged in certain
cases.—(1) Where the capital gain arises 4[from the transfer before the 1st day of April, 2006, of a longterm capital asset,] being listed securities or unit (the capital asset so transferred being hereafter in this
section referred to as the original asset), and the assessee has, within a period of six months after the date
of such transfer, invested the whole or any part of the capital gain in acquiring equity shares forming part
of an eligible issue of capital (such equity shares being hereafter in this section referred to as the specified
equity shares), the said capital gain shall be dealt with in accordance with the following provisions of this
section, that is to say,—
(a) if the cost of the specified equity shares is not less than the capital gain arising from the
transfer of the original asset, the whole of such capital gain shall not be charged under section 45;
(b) if the cost of the specified equity shares is less than the capital gain arising from the transfer
of the original asset, so much of the capital gain as bears to the whole of the capital gain the same
proportion as the cost of the specified equity shares acquired bears to the whole of the capital gain
shall not be charged under section 45.
Explanation.—For the purposes of this sub-section,—
(i) “eligible issue of capital” means an issue of equity shares which satisfies the following
conditions, namely:—
(a) the issue is made by a public company formed and registered in India;
(b) the shares forming part of the issue are offered for subscription to the public;
(w.e.f. 12006).
289
by the National Highways Authority of India constituted under section 3 of the
National Highways Authority of India Act, 1988 (68 of 1988); or
by the Rural Electrification Corporation Limited, a company formed and registered
under the Companies Act, 1956 (1 of 1956),
and notified by the Central Government in the Official Gazette for the purposes of this section with such
conditions (including the condition for providing a limit on the amount of investment by an assessee in
such bond) as it thinks fit:]
1[Provided that where any bond has been notified before the 1st day of April, 2007, subject to the
conditions specified in the notification, by the Central Government in the Official Gazette under the
provisions of clause
as they stood immediately before their amendment by the Finance Act, 2007
(22 of 2007), such bond shall be deemed to be a bond notified under this clause;]
2[
“long-term specified asset” for making any investment under this section,––
on or after the 1st day of April, 2007 but before the 1st day of April, 2018, means any
bond, redeemable after three years and issued on or after the 1st day of April, 2007 but before the
1st day of April, 2018;
on or after the 1st day of April, 2018, means any bond, redeemable after five years and
issued on or after the 1st day of April, 2018, by the National Highways Authority of India
constituted under section 3 of the National Highways Authority of India Act, 1988 or by the
Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956 or any other bond notified in the Official Gazette by the Central
Government in this behalf.]
3[54ED. Capital gain on transfer of certain listed securities or unit not to be charged in certain
cases.—
Where the capital gain arises 4[from the transfer before the 1st day of April, 2006, of a longterm capital asset,] being listed securities or unit (the capital asset so transferred being hereafter in this
section referred to as the original asset), and the assessee has, within a period of six months after the date
of such transfer, invested the whole or any part of the capital gain in acquiring equity shares forming part
of an eligible issue of capital (such equity shares being hereafter in this section referred to as the specified
equity shares), the said capital gain shall be dealt with in accordance with the following provisions of this
section, that is to say,—
if the cost of the specified equity shares is not less than the capital gain arising from the
transfer of the original asset, the whole of such capital gain shall not be charged under section 45;
if the cost of the specified equity shares is less than the capital gain arising from the transfer
of the original asset, so much of the capital gain as bears to the whole of the capital gain the same
proportion as the cost of the specified equity shares acquired bears to the whole of the capital gain
shall not be charged under section 45.
Explanation.—For the purposes of this sub-section,—
“eligible issue of capital” means an issue of equity shares which satisfies the following
conditions, namely:—
the issue is made by a public company formed and registered in India;
the shares forming part of the issue are offered for subscription to the public;