Indian Railway Finance Corporation (IRFC)

IRFC – 54 EC Capital Gain Bonds – Series V

About IRFC bonds

Indian Railway Finance Corporation (IRFC) laid their foundation in 1986. IRFC is dedicated to finance the Indian railways via funds coming from domestic and international capital markets.

Indian railway bonds since the 30 years of existence have played an important role by financing the adequate fund proportion of the annual plan to support the Indian railways and its related structure expansion.

Rating :- “AAA/Stable’ by CRISIL, “ AAA ( Stable)” by ICRA & “AAA/ Stable” by CARE

Why should you invest in an Indian Railway Finance corporation bond? ( IRFC)

IRFC aims to become the leading financial services company in the country to raise the funds from the capital market at the best rates to raise the funds for the railway plans making sure to earn substantial profits from their operations.

  • IRFC raises their funding from the capital markets at the best price and the terms are announced as per the targets provided to them by the Railway ministry.
  • There’s no TDS but the interest earned on the bond is taxed.
  • IRFC bonds interest rate is 5% and is paid to the investors on 15th October annually.
  • IRFC bonds are AAA-rated bonds by CRISIL, ICRA, and CARE.

Things to remember while investing in IRFC bonds

  • Minimum IRFC bond investment is ₹10,000 for 2 bonds and maximum investment is ₹50,00,000 during a financial year.
  • In case the investor does not have a Demat account, an investor will receive the physical bond certificate similar to a fixed deposit.
  • 5% PA is paid every year on 15th October until the redemption and the balance is paid to the investor along with redemption on the expiry date of the IRFC bonds.
  • According to section 54EC of I.T., any person (individuals, HUFs, partnership firms, companies etc.) can avail exemption in respect of long-term capital gains (arising from the sale of a long-term capital asset other than equity shares and securities), if the capital gain is invested in Capital Gain bonds. The exemption will be the amount of capital gain or the amount of investment made, whichever is less.
  • The investment is made within a period of 6 months from the date of transfer of the asset.
  • Lock-in period to 5 years.
  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.
  • Those who wish to save taxes on LTCG can invest the amount in the capital gains bonds within six months from the date of arising profit. By investing in 54 EC Capital gain bond one can save up to Rs 50 Lakh in a single financial year. These instruments are not only capital protected instruments, but they also provide a steady stream of income to you @5%

TAX Exemption under Section 54 EC

  • Section 54 EC bonds can be used to save tax only when the capital gain is derived from land or building or both.
  • It cannot be used to save tax on capital gain arising from the sale of non-equity mutual funds, debentures, gold jewelry or gold ETFs.
  • The maximum investment in these bonds is Rs. 50 lakh only. As the property prices have soared high, this provision does not provide adequate relief for the investor.

How to subscribe to the IRFC bonds?

To apply for an IRFC bond, you will have to

  • Download the IRFC application form
  • Fill the application with the required details and documents.
  • Along with the IRFC bond application form, draw a cheque in the name of- IRFC Capital Gain Bonds.
  • Courier the form to us at below address along with copy of your PAN card, Cancelled Cheque and Address proof.
    • Mutual Funds Department
    • Asit C. Mehta Investment Interrmediates Ltd.
    • Nucleus House, Saki Vihar Road, Andheri (E), 400072 Mumbai, Maharashtra