Capital Gain Bonds (54EC Bonds)

Capital Gain Bonds or 54EC bonds are one of the best way 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.

Capital Gain bonds do not allow any tax exemption on short-term capital gains tax. . 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), NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited)

Key Features of 54EC Bonds

• Safe and Secure: 54EC bonds are AAA rated
• Interest: Interest on 54EC bonds is taxable. No TDS is deducted
• Tenure: lock-in period of 5 years
• Investment Amount: Maximum Rs. 50 lakh in a financial year
• Interest Rate: Presently offer 5.75% rate of interest payable annually