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Dematting makes no difference for taxation

I have not dematted some shares in private companies. I wish to avail myself of the benefit of Sec. 54EC by purchasing bonds to reduce my liability. Will the fact that the shares relate to a private company or that they have not been dematted make any difference to my right to reinvestment benefit?

The benefit of Sec. 54EC is available on transfer of any long-term capital asset. The shares of companies are also investments. Unless they had been acquired with the sole intention of resale in which case, surplus will be taxable only under the head “business income” and no reinvestment benefit is available. If the shares held by the reader are investments, it makes no difference whatsoever, whether they relate to private companies or whether they are shares, which have not been dematted. In fact, benefit under Sec. 54F for construction of residential house property subject to conditions thereunder, is also available for assessees, who are either individuals or Hindu Undivided Families.

S. RAJARATNAM

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