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54EC Capital Gain Bonds

By investing in 54EC capital gain bonds , investors can profit from Section 54EC of the Income Tax Act of 1961.

If the investment is made within 6 months after the sale, these bonds provide savings on Long-Term Capital Gains from the sale of real estate. For these bonds, the maximum investment is Rs.50,00,000 each financial period. It's crucial to remember that income tax applies to the interest paid on these bonds.

Rural Electrification Corporation

REC

(Rural Electrification Corporation)

Minimum Investment
20,000
ROI (per annum)
5.25
Rating
AAA
Interest Credit Date
30th June
Indian Railway Finance Corporation

IRFC

(Indian Railway Finance Corporation)

Minimum Investment
20,000
ROI (per annum)
5.25
Rating
AAA
Interest Credit Date
15th October
Power Finance Corporation

PFC

(Power Finance Corporation)

Minimum Investment
20,000
ROI (per annum)
5.25
Rating
AAA
Interest Credit Date
31st July
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    Payment

    Bank details for making payemnt via RTGS/NEFT/CHEQUE

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    PFC Capital Gain Bonds

  • PFC, a non-banking company, operates under the Ministry of Power's jurisdiction. Its primary function is to offer financial assistance to power sector projects and electrification endeavors across India. Additionally, it extends consultancy and advisory services to entities engaged in the power sector. PFC Capital Gain Bonds provide a chance to save capital gains taxes incurred from selling or transferring long-term capital assets such as land, buildings, or both.
  • REC Capital Gain Bonds

  • REC, a Navratna CPSE under the Ministry of Power, provides financial assistance for power infrastructure to State Electricity Boards, utilities, and private entities. Its main focus is financing rural electrification projects across the country, aiding State Electricity Boards, Government Departments, and Rural Electric Cooperatives. REC Capital Gain Bonds provide a chance to save capital gains taxes incurred from selling or transferring long-term capital assets such as land, buildings, or both.
  • IRFC Capital Gain Bonds

  • IRFC, a financing arm of the Ministry of Railways, raises funds from debt capital markets to finance Indian Railways' plan outlay partially. These funds are primarily allocated for acquiring new rolling stock assets for lease to Indian Railways and developing railway infrastructure. IRFC Capital Gain Bonds provide a chance to save capital gains taxes incurred from selling or transferring long-term capital assets such as land, buildings, or both.
  • Understanding 54EC Capital Gain Bonds

  • It's worth noting that these bonds have a specific purpose, which is to encourage individuals to reinvest their profits from property sales and provide them with a tax-saving option. By investing in these bonds, you can defer your tax payment and potentially earn interest on your investment.
  • Capital Gain Bonds also come with some more benefits. They generally offer a fixed interest income, which means you can earn regular interest payments on your investment. This interest income is taxable based on your income tax rate.
  • Please note that when investing in 54EC Capital Gain Bonds , it's important to be aware of the lock- in period. This period refers to a specific duration of 5 years, during which you won't be suitable to withdraw your invested funds. Once this Lock-in period is over, you will admit your original investment quantity back without any fresh tax implications.
  • An individual or a Hindu Undivided Family (HUF) that has realized long-term capital gains from the sale of property or land is qualified to purchase 54EC Capital Gain Bonds . Generally speaking, long-term capital gains are gains from assets you own for longer than a specific time frame, such as 12 months.
  • Tax Benefits and Investment Opportunities of Capital Gain Bonds

  • Fortunately, it's crucial to keep in mind that income tax is applied to the interest you receive on these bonds. You will therefore be required to pay taxes on that income by your income tax rate when you receive the interest payments.
  • Investing in 54EC Capital Gain Bonds allows you to save on taxes while earning a 5.25% interest rate on Capital Gain Bonds investment. Still, it's essential to completely review the bond's terms and conditions, including the interest rate and lock- in period, before making any investment opinions

Typically, these bonds are offered by government-backed institutions such as the Rural Electrification Corporation (REC), Indian Railway Finance Corporation (IRFC), and Power Finance Corporation (PFC).

Why has the National Highways Authority of India (NHAI) decided to stop offering "54EC capital gain bonds" for the year 2022-23, and what steps are they taking regarding applications and refunds for these bonds?

The National Highways Authority of India (NHAI) has decided to stop offering a type of investment called "54EC capital gain bonds" for the year 2022-23. They've told banks not to accept any new applications or money for these bonds starting from September 3, 2022.

If someone's money was added to these bonds' accounts after September 3, 2022, NHAI will give that money back. If investors were hoping to use these bonds to avoid paying some taxes on their profits, they'll need to work with the banks or financial companies they dealt with, as NHAI won't be responsible for that part.

This decision might be because the government told NHAI to be careful about borrowing money for the next three years, so they don't end up owing too much. NHAI already has a lot of debt, around ₹3.44 trillion as of January 2022.

Visit our blog to learn about Capital Gain Bonds in India

Key Features of 54EC Capital Gain Bonds
  • Rate Capital Gain Bonds Interest Rate

    It offers a 5.25% rate of interest payable annually.

  • Investment Investment Amount

    Amount of 1 bond is 10,000/- and for PFC, IRFC, REC the minimum number of bond should be 2 that is 20,000/- for each and the maximum investment in 54EC bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.

  • Maturity Maturity

    54EC bonds come with a lock-in period of 5 years (effective from April 2018).

  • Transferability Transferability

    The 54EC bonds cannot be transferred from one person to another at any point in time.

  • Tax Tax applicable on interest

    No TDS is deducted for resident individual however TDS will be deducted for NRIs. Interest is taxable as per investor income slab for all investors

Why to invest in 54EC Capital Gain Bonds?
Who are eligible to invest in these Bonds?
Capital Gain Bonds

Documents Required for 54EC Capital Gain Bonds

  1. Self-attested copy of PAN Card (in case of Joint application, self-attested PAN copy of all the applicants) OR Form 60 (in case the investor does not have PAN).
  2. Cancelled Cheque leaf for payment of interest/redemption through NEFT/RTGS facility.
  3. Other documents as applicable below:

Any one of the following for address proof:

  1. AADHAAR Card
  2. Passport/Driving License
  3. Identify Card issued by any Government Institution
  4. Copy of the electricity bill or Gas connection showing residential address
  5. Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address
  6. Voters Identity card
  7. Ration Card
  8. Bank Passbook with address and latest transactions updated

All documents (as applicable) attested by any Partner/Notary

  1. Registration certificate, if registered
  2. Partnership deed
  3. Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf
  4. Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses
  5. Telephone bill in the name of firm/partners
  6. Copy of PAN/PAN Allotment letter

All documents (as applicable) attested by Trustee/Notary

  1. Certificate of registration, if registered
  2. Power of Attorney granted to transact business on its behalf
  3. Any officially valid document to identify the Trustees, Settlers’, Beneficiaries and those holding Power of Attorney, Founders/Managers/ Directors and their addresses
  4. Resolution of the managing body of the Foundation/Association
  5. Telephone bill
  6. Copy of PAN/PAN Allotment letter (otherwise exemption certificate issued by IT Authorities)
  1. Passport (Mandatory)
  2. Photocopy of Cancelled Cheque (NRO Account)
  3. Self certified address proof

All documents (as applicable) attested by Company Secretary/Director

  1. Certificate of incorporation and Memorandum & Articles of Association
  2. Directors and identification of those who have authority to operate
  3. Power of Attorney granted to its managers, officers or employees to transact business, on its behalf
  4. Copy of PAN/PAN Allotment letter
Frequently Asked Questions (FAQs)
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RR has been an authorised broker/arranger with all issuers of Capital Gain Bonds since their inception. RR is also among the top mobilizers of capital gain bonds in India. We have a pan-India presence through our network and offices.

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