Explore / 54 EC Bonds

54EC bonds, or capital gains bonds, are one of the best way to save long-term capital gain tax arising from sale of a long-term capital asset – like immovable property, thus availing the necessary tax exemption. Under Section 54 EC of Income Tax, 1961 an investor need not pay any tax on any long-term capital gains arising on sale of any asset, if the amounts of capital gains are invested in certain specified bonds. 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

Rating : 54EC bonds are AAA rated.

Rate of Interest : 5.00% p.a. payable annually

Taxation : Interest is taxable although no TDS is deducted

Tenure : 5 years with Automatic Redemption at maturity

Investment Amount : Minimum investment is 1 bond (Rs. 10,000) and the maximum investment is 500 bonds (Rs 50 lakhs) in a financial year.

Age Below 30 years 31 to 40 years 41 to 50 years 51 to 60 years Above 60 years

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