Saving Tax in Sale of Property

In this article, we will see does it really make sense to invest money in capital gains bonds issued by REC (Rural Electrification Corporation) or National Housing Board (NHB) etc.You have 6 months to buy these bonds from the capital gains. These bonds give 8% to 9% returns on average and you have to remain invested for 3 years to avail the savings on tax. However, the returns on these bonds are taxable. It means your effective return is about 6% to 7%. We have the following situation. A person bought an apartment in 2008 at about 46 lakhs and sold in 2012 at 1 crore. First let;s find out the tax obligation and then we will see how we can use this money for better returns over next few years.

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Features of PPF

Public Provident Fund is one of the most famous options (next to EPF) for investing your money in a secure, Government backed investment instrument. This investment option can be used for tax benefits under the income tax section of 80C subject to the limit of 1 lakh. Investment in PPF is one of the few investments where the returns are tax exempt. Because of tax exempt feature PPF investment has become a favoured investment among individuals and salaried class.

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