54EC bonds, or capital gains bonds, are one of the best ways to save long-term capital gain tax. Such 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 IRFC (Indian Railways Finance Corporation Limited).

Key Features of Capital Gain Bonds:

Safe and Secure: These bonds are AAA rated.

Interest: Interest on 54EC bonds is taxable. No TDS is deducted on interest from 54EC bonds and wealth tax is exempted.

Tenure: 54EC bonds come with a lock-in period of 5 years (effective from April 2018) and are non-transferable.

Investment amount: Minimum investment in 54EC bonds is 1 bond amounting to Rs. 10,000 and the maximum investment in 54EC bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.

Interest Rate: 54EC bonds offer 5% rate of interest payable annually.

Key Benefits of Capital Gain Bonds

Individuals as well as members of HUF can make investments in 54EC bonds. You should invest in 54EC bonds within 6 months of transferring capital assets.

SAVE TAX

Long-term capital gains from investments in 54EC bonds or sale of 54EC bonds can be reinvested in order to save tax.

SECURITY

54EC bonds are backed by the government, hence the risk factor associated with buying 54EC bonds is mitigated.

EARN & SAVE

Investing in 54EC bonds allows you to save tax while earning interest income from the 54EC bonds.

Capital Gain Bonds can be held in either demat or physical form.

 Avail the opportunity to invest in Capital Gain bonds to gain tax deductions!