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Investors can benefit from tax exemption on capital gains under Section 54EC of the Income Tax Act 1961 by investing in 54EC capital gain bonds. These bonds offer savings on long-term capital gains from selling property if the investment is made within six months of the sale. The maximum investment limit for these bonds is Rs. 50,00,000 per financial year. Starting from April 1st, 2023, The interest rate on these bonds has increased to 5.25% per annum . It's important to remember that the interest earned on these bonds is subject to income tax.

54EC bonds have the highest safety rating ("AAA") and are issued by central PSUs, ensuring no repayment or interest risk.

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
How offline investment works?
  • Download & fill Application form

    Click to download form

  • Payment

    Bank details for making payemnt via RTGS/NEFT/CHEQUE

  • Submit Application

    Submit application to nearest RR office or call us on 9350316010 to arrange pickup.

  • Need Help?

    Call on the mobile number given below for any related help

    9350316010
Understanding Capital Gain Bonds: Tax Benefits and Investment Opportunities
  • 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 additional benefits. They typically 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 capital gain bonds, it is important to be aware of the lock-in period. This period refers to a specific duration, typically 5 years, during which you will not be able to withdraw your invested funds. Once this lock-in period is over, you'll receive your initial investment amount back without any additional tax implications.
  • To be eligible for capital gain bonds, you need to be an individual or a Hindu Undivided Family (HUF) who has earned long-term capital gains from specific assets. Long-term capital gains are usually profits from assets that you held for more than a certain period, such as one year
  • However, it's important to remember that the interest you earn on these bonds is subject to income tax. So, when you receive the interest payments, you will need to pay taxes on that income according to your income tax rate.
  • By investing in capital gain bonds, you not only save on taxes but also have the opportunity to earn interest on your investment. However, it's important to carefully consider the terms and conditions of these bonds, including the interest rates and the lock-in period, before making any investment decisions.

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.

Key Features
  • Rate of Interest

    54EC bonds offer 5.25% rate of interest payable annually.

  • 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

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

  • Transferability

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

  • 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
List of Documents Required
  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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