One stop investment avenue 

Open Demat Account close-announcements
Online Trading Online Mutual Funds Back Office Global Investing Login Wealth Management Self Care

CALL US

+91 22 48934000

Contact Details Locate Branch
Capital_Gain_Bonds_60579598cfcfcy

Long-term capital gains (LTCG) are taxable under the Income Tax Act. However, you can get exemption on LTCG tax under Sections 54, 54F, and 54EC. While Sections 54 and 54F pertain to purchasing a house with the capital gains made, Section 54EC allows you to claim exemption from LTCG tax on the purchase of notified government bonds.

Capital Gain Bonds are being issued as “Long Term Specified assets” within the meaning of Sub Section 54EC of Income Tax Act 1961. Those desirous of availing exemption from the capital gain tax under section 54EC may invest in these bonds.

Capital gain arising from the transfer of the Long-Term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gain tax under section 54EC. The maximum limit for investing in these bonds is Rs.50 Lacs and minimum Rupees Ten Thousand.

Corporates / Institutions Issuing Capital Gain Bonds (Sec 54EC)

  • Power Finance Corporation Limited (PFC)
  • Indian Railway Finance Corporation Limited (IRFC)
  • Rural Electrification Corporation Limited (REC)
  • National Highway Authority of India Limited (NHAI)

Terms & Issue Highlights

Issue Highlights
Rural Electrification Corporation of India (REC)
National Highway Authority of India Limited (NHAI)
Power Finance Corporation Limited (PFC)
Indian Railway Finance Corporation Limited (IRFC)
Coupon / Interest Rate Payable Annually
5%
5%
5%
5%
Rating
“AAA Stable” by CRISIL / “CARE AAA” by CARE “AAA(ind)” by Fitch Ratings
“AAA/Stable” by CRISIL, “AAA/ind” by Fitch Ratings, and "AAA" by CARE
AAA/Stable by CRISIL, ‘AAA’ by ICRA, &'AAA' by CARE
“AAA by CRISIL CARE AND ICRA”
Face Value of the Bond
Rs.10,000
Rs.10,000
Rs.10,000
Rs.10,000
Minimum Bonds allowed for Subscription
2 Bonds worth Rs.20,000/-
1 Bond worth Rs.10,000/-
2 Bonds worth Rs.20,000/-
2 Bonds worth Rs.20,000/-
Tenure of the Bonds
5 Years from the Date of Allotment
5 Years from the Date of Allotment
5 Years from the Date of Allotment
5 Years from the Date of Allotment

Lock-In Period

5 Years
5 Years
5 Years
5 Years
Interest Payment Date
June 30 Every Year till Maturity
March 31 Every Year till Maturity
July 31 Every Year till Maturity
October 15 Every Year till Maturity
Issuance Mode
Both Physical & Demat
Both Physical & Demat
Both Physical & Demat
Both Physical & Demat
Eligible Investor
Both Individual & HUF Member
Both Individual & HUF Member
Both Individual & HUF Member
Both Individual & HUF Member

Key Features of the Capital Gain Bonds (54 EC Bonds)

  • Issuer – Issued by the PSU Corporate (Navratan Companies)
  • Safe – Highest Credit Rating assigned to the Bonds “AAA Stable By both CRISIL & CARE” to all the four issues
  • Investment Amount – Minimum Investment in Capital Gain Bonds is Rs.10,000 & Maximum is Rs.50 Lacs in a financial year.
  • Interest Rate – All four issues bear a coupon of 5% which is paid annually. Interest earned on these bonds is taxable and no TDS is deducted on interest on these bonds. Wealth Tax is exempted.
  • Lock-in Period – These bonds having a maturity of 5 years and not saleable & non – transferable.

Benefits of Investing in Capital Gain Bonds

  • Save Tax – Under Sec 54 EC of Income Tax Act 1961, an investor can save tax while investing in these bonds.
  • Security – Capital Gain Bonds are issued by the Navratan Companies which are owned and backed by the government, hence risk factor associated with buying Capital Gain Bonds is mitigated.
  • Earn & Save – Interest received on these bonds can be reinvested in other asset classes to get a better return. Capital Invested can be “saved” for the future.

Are you an investor? Or want to start investing? then visit here to get your free Demat account to start investing in the best stocks.


Related Posts

BLOG

Dec 13 . Mon

March end is approaching fast, and t...

61b74b144961c.1639402260.Tax-Savings-2021_605786ef18792

BLOG

Dec 13 . Mon

In order to boost domestic manufactu...

61b74c2a01f3f.1639402538.PLI-Scheme_in-INDIA_(1)_(1)_6050e27e162d6

BLOG

Dec 13 . Mon

In this blog, we have discussed a st...

61b752b06ea4f.1639404208.Gold_and_bitcoin_correlation_(1)_(1)_(1)_(1)_6040afe389cbc

BLOG

Dec 13 . Mon

                         Things to know about small-cap funds:

As per SEBI’...

61b7555982578.1639404889.Small-cap-funds-investment_603c972bdfd48

attention-icon Attention Investors

1) Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. 2) Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge. 3) Pay 20% upfront margin of the transaction value to trade in cash market segment.  4)Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.5) Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. 6) For Stock Broking transaction : Prevent unauthorised transactions in your account 7) KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary  8) Update/ confirm your mobile number/email ID with us OR If you wish to change/ modify the current Mobile No. & E-mail ID, you are requested to provide MODIFICATION FORM duly filled in and signed OR If you do not want to provide Mobile No. & E-mail ID, you are requested to send DECLARATION FORM duly filled and signed.  9) Receive information of your transactions directly from exchange on your mobile/email at the end of the day...Issued in the interest of Investors 10) No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remain in investor's account. 11)As per SEBI Circular MIRSD/ SE /Cir-19/2009 dated December 3, 2009 Client transaction account shall be required to do the actual settlement of funds and securities at least once in a Quarter or month.