When Tax benefits could be canceled

Tax benefits could be canceled in following cases

  • In the case of Post office time deposit when premature withdrawal will happen within the five-year lock in period, the principal and interest earned will be liable to tax.
  • Deduction is rolled back from the employees’ provident fund if the employee withdraws the PF balance before rendering continuous service with the employer for five years.
  • When an individual surrenders the insurance policy which he/she bought to take the tax benefits before premiums for two years have been paid, the tax relief granted earlier will be revoked, as per tax law.
  • If you have taken the home loan and sell this house within five years, in this case you may have to forgo your tax benefits.
  • Capital gain exemption claimed by reinvesting sales proceeds of long-term capital assets in NHAI or REC bonds will be revoked if these bonds are sold or redeemed within there years from date of acquisition.
  • Now, you are not allowed to sell or pledge any eligible security during the fixed lock in period