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Capital Gain Bond

54EC bonds, commonly referred to as Capital Gains Bonds, are one of the ways to save long-term capital gain tax. 54EC bonds are specifically meant for any person (individuals, HUFs, partnership firms, companies etc.). You can avail exemption in respect of long-term capital gains arising from the sale of residential property, if the capital gain is invested in the Capital Gain Bonds.

Key Features Of 54EC Bonds

  • Safe and Secure : 54EC bonds are AAA rated and are issued by PSUs backed by Government of India.

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

  • Tax implication : Interest on 54EC bonds is taxable. The principle is tax-free on maturity.

  • Tenure : 54EC bonds have a lock-in period of 5 years and are non-transferable.

  • Investment amount : The 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.

  • Mode of Holding : 54EC bonds can be held either in Physical form or in Demat Form.