Capital Gains Tax Saving Bonds

INVESTMENT IN CAPITAL GAINS TAX SAVING BONDS

Capital gains tax exemption bonds are also known as Capital Gain Bond (54EC) bonds. Investment in these bonds allows exemption under section 54 EC of the Income-tax Act. These bonds are offered to investors who earned long-term capital gains from Land and Building and would like to tax exemption on these gains.

Tax saving investment options

Government notifies the Bonds eligible for Capital Gain Bond (54EC) investment, current list is as follows

  • National Highways Authority of India (NHAI)
  • Rural Electrification Corporation Ltd (REC)
  • Power Finance Corporation Limited (PFCL)
  • Indian Railway Finance Corporation (IRFC)

Safety

These bonds are issued by Public sector companies, wherein government is major share holder hence the risk of interest and capital payment is protected.

Liquidity

These bonds come with a lock-in period for 5 years (effective from April 2018) and are non-transferable. Hence there is no liquidity.

Returns

This instrument is the only option available to you to shield your Long term capital gains from Income-tax (at your marginal tax rate) in case you choose not to buy another similar asset as per stipulated conditions. In addition, you earn 5% taxable interest per annum (no TDS).

Regulatory Oversight

Government of India is the approving authority for issue of bonds

Open account with us & start investing!

Government of India is the approving authority for issue of bonds

 

CAPITAL GAIN BOND (54EC) INVESTMENTS

List of Bonds:

  • 1-National Highways Authority of India (NHAI)
  • 2-Rural Electrification Corporation Ltd (REC)
  • 3-Power Finance Corporation Limited (PFCL)
  • 4-Indian Railway Finance Corporation (IRFC)

Investment Amount:

  • PFCL / NHAI / REC/ IRFC
  • Minimum Investment Amount Rs. 10,000/-
  • Maximum investment limit of up to Rs. 50 Lakhs in a year across the four issuers for claiming 54EC benefit.
  • Maturity Date: 5 Years (effective from Apr-2018)
  • Interest Rate: 5% for all bonds (effective from 01-Aug-2020)
  • Frequency of Interest: Yearly.
  • Mode of Invest: Demat / Physical

JUST FOR INFORMATION

In case of household property investment can be made in another house, you need not invest in these bonds.