How to report bond investments in ITR?

-Dilip Saxena

It is assumed that you have sold a flat which was held for a period of more than 24 months and hence the gain from it will qualify as long term capital gain (LTCG). Further, it is assumed that you have already invested such LTCG in REC Bonds as specified by section 54EC of the Income Tax Act, 1961 and all other prescribed conditions (for availing exemption) are fulfilled have been done.

An individual taxpayer who has income under the head capital gains and not income under the head ‘Profits or gains from business or profession’ (PGBP) is required to file a tax return in Form 2.

For the purpose of your question, it is assumed that you have no income under PGBP.

The Income Tax Department has already notified Form ITR 2 for FY 2023 (i.e. Assessment Year 2023-24). In the above form, LTCG will be required to be reported under the relevant Schedules given below:

Schedule CG: Capital Gains:

PART-B, SERIAL NO. 1: This part covers reporting of LTCG from sale of land and/or building. Details regarding date of sale and purchase, sale consideration, stamp value, actual and indexed cost of acquisition, cost of improvement, transfer expenses, exemption claimed, etc. under section 54/54B/54EC/54F/54GB of the Act are necessary. To be reported under relevant areas.

Part-D, Serial no. 1: This part covers reporting of any deduction claimed under section 54/54B/54EC/54F/54GB of the Act. The details of exemption claimed under section 54EC are required to be reported under item number ‘C’, which includes reporting of date of transfer, date of investment in bonds and amount of investment etc.

Part F: After claiming the eligible exemption, if there is any taxable amount of LTCG, the information regarding receipt/ realization of such capital gain will need to be reported under Part F, Sr. no. 6.

Schedule Tax Payments:

If tax has been deducted at source in consideration of sale by the buyer of the property, such TDS would be required to be reported in appropriate serial number. C1 of the Tax Payment Schedule. The details of such amount will be available in the Form 26AS / Form 16B issued by the buyer.

In addition to the above, investments in bonds are also required to be reported under Schedule AL – Assets and Liabilities, if applicable.

Parijad Sirwala is Partner and Head, Global Mobility Services, Tax, KPMG in India.