What are the circumstances in which exemption under section 54EC can be withdrawn?
The exemption claimed by assessee under s​ection 54EC can be withdrawn in the following circumstances:
a) Transfer of bonds within 5 years: If the bonds are transferred within five years, the previously exempted amount of capital gains from the transfer of the original asset will be subject to tax as a long-term capital gain in the previous year in which the bonds are transferred. As a result, the exemption previously granted for the transfer of the original long-term capital asset is forfeited.
b) Conversion of bonds within 5 Years: If the bonds are converted into cash within five years of their acquisition, the previously exempted amount of capital gains will be subject to tax as a long-term capital gain in the previous year in which the bonds are converted into cash.
​