Capital Gains Bonds – 54EC Bonds
54EC bonds, or capital gains bonds, are one of the best ways to save long-term capital gain tax. 54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. Tax deduction is available under section 54EC of the Income Tax Act. 54EC bonds do not allow any tax exemption on short-term capital gains tax. Invest in 54EC bonds to get benefits of tax deduction. The maximum limit for investing in 54EC bonds is Rs. 50, 00,000. The eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited).
Listed below are the Key features of Capital Gains Bonds:
| Issue Details | On-going |
| Tenure | 5 years |
| Rate of Interest | 5.75% p.a. payable annually |
| Taxation | Interest is taxable although no TDS is deducted |
| Redemption | Automatic Redemption after 5 Years |
| Rating | AAA rated |
| Mode of Holding | Physical or Demat |
| Min Investment | 1 Bonds (Rs. 10,000) |
| Max Investment | 500 Bonds (Rs. 50,00,000 Lacs) |
Capital Gains Bonds are issued by the below Corporations:
| Bonds | Issue Details | Coupon | Rating | Tax Benefit | Tenure | Application Form |
| Rural Electrification Corporation | On-Going | 5.75% p.a. | AAA Rating | Taxable Bonds with benefits under Section 54 EC of Income Tax Act, 1961 | 5 Years | Download |
| National Highway Authority of India | On-Going | 5.75% p.a. | AAA Rating | 5 Years | ||
| Power Finance Corporation | On-Going | 5.75% p.a. | AAA Rating | 5 Years | ||
| Indian Railways Finance Corporation | On-Going | 5.75% p.a. | AAA Rating | 5 Years |
Disclaimer: Interest Rates are subject to revision by the respective Companies/Government from time to time. Saffollya Investment Advisory LLP acts as a referral agent to these companies and the offer is brought to you by the companies subject to fulfillment of eligibility criteria, terms and conditions etc. Investors are advised to read the Terms and conditions offered by respective companies carefully before taking any investment decision.
Frequently Asked Questions
Who can invest in 54 EC bonds?
The following can apply:
Resident Individuals
Hindu Undivided Families (HUF)
Firms
Companies
Banks, Commercial RRB, Co-operative Banks
Financial Institutions
Company
Mutual Funds
Insurance Companies
Eligible NRIs (as per applicable law and regulations)
What is the mode of application & payment?
You can apply for the 54 EC bonds offline with physical forms. The payment can be done through cheque, DD or RTGS
In what form can 54 EC bonds be held?
The bonds can be held in physical or demat form.
