54EC BONDS – CAPITAL GAIN BONDS ISSUED UNDER SECTION 54EC

The profit on sale of capital asset is called capital gain. Those who sell property above 24 months are called long term capital gains. With the provision to avoid capital gain tax, we can save tax by investing tax in 54 EC Bond.

Key Features

54EC bonds are popular investment instruments as investing in 54 EC bonds allows investors to claim tax deductions on long-term capital gains. 54 EC bonds also offer other features.

Interest Rate

Annual interest rate 5 % p.a. 

Rating

CRISIL – AAA/stable

ICRA  – AAA

No TDS Deduct

No TDS but interest earned is taxable.

Physical & Dmat Mode

available in Physical as well D’mat 

Key benefit of 54 EC

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 asset. 

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.

Tax Benefit

How 54 EC Bonds help in Tax Benefits

The investment amount should originate from capital gains arising out of the sale of a property

In case the capital gain was shared by partners in a real estate business, each partner is entitled to a maximum limit of Rs. 50 Lakh.

Investment in these bonds should be made within 6 months from the date of sale of the property or before filing their income tax returns.

COST INFLATION INDEX  (Base Year 2001-2)

2001 - 2005

 

2001-02     100

2002-03     105

2003-04     109

2004-05     113 

2006 - 2010

2005-06     117

2006-07     122

2007-08     129

2008-09     137

2009-10     148

2011- 2015

2010-11     167

2011-12     184

2012-13     200

2013-14     220

2014-15     240

2016 - 2020

2015-16     254

2016-17     264

2017-18     272

2018-19     280

2019-20     289

2021

2020-21     301

 

 

 

 

Note : The base year for computation of capital gains has been shifted from 1981 to 2001 with effect from assessment year 2018-19. Thus, if any capital asset (acquired before April 1, 2001) is transfered then assessee has an option to take its cost of acquisition either as fair market value as on April 1, 2001 or its actual cost.

Eligible bond

for 54 EC

REC

  • Minimum 2 Bonds
  • Maximum 500 Bonds
  • 5 % Interest
  • 5 Years
  • No TDS
  • Interest paid yearly

IRFC

  • Minimum 2 Bonds
  • Maximum 500 Bonds
  • 5 % Interest
  • 5 Years
  • No TDS
  • Interest paid yearly

PFC

  • Minimum 2 Bonds
  • Maximum 500 Bonds
  • 5 % Interest
  • 5 Years
  • No TDS
  • Interest paid yearly

NHAI

  • Minimum 2 Bonds
  • Maximum 500 Bonds
  • 5 % Interest
  • 5 Years
  • No TDS
  • Interest paid yearly

FAQ

Who can invest in 54 EC capital Gain Bonds ?

Individual, Hindu Undivided Family (HUF), approved institution and non-resident Indian (NRI), can invest in these bonds provided certain conditions are met. The condition is that only long-term capital gains (LTCG) earned by selling a residential flat or independent house, which you held for at least three years, can be invested in this bond

What is Interest Rate in 54 EC Bonds ?

Current Interest Rate 5 % (effective date 1 Aug. 2020 ) for these bonds. You will be paid the interest on the 30th of June every year.

What is the lock-in period for 54 EC Bonds?

The lock-in period will be 5 years with effect from April 1, 2019. ( Old lock-in period 3 years)

What is the maximum investment limit for the Section 54-EC Capital Gain Bonds?

50 lakhs is the maximum amount that can be invested in these capital gain bonds.

How much amount can I invest to get the tax exemption?

You are required to make a minimum investment of Rs 10,000, while the maximum amount you are permitted to invest is Rs 50 lakh in a financial year. Since, the face value is Rs 10,000 per bond, you can buy maximum of up to 500 bonds in one financial year.

Which bonds are eligible under the Section 54 EC?

REC (Rural Electrification Corporation), IRFC (Indian Railway Finance Corporation), PFC (Power Finance Corporation) and NHAI (National Highways Authority of India) are the bonds eligible under Section 54 EC.

Issue of Non-convertible, Non-cumulative , Secured, Redeemable, Taxable Bonds in the nature of Debentures of Rs. 10,000 each for cash at par with benefits U/S 54EC of the Income Tax Act 1961, on Private Placement – Series XIV – On Tap Basis.

IssueREC Capital Gains Tax Exemption Bonds- Series XIV
Credit Rating'ICRA AAA' by ICRA Limited
'CARE AAA' Stable/ CARE A1+ by CARE Rating Limited
'CRISIL AAA/stable' by CRISIL Limited
Face ValueRs. 10,000 per bond
Coupon Rate/ Interest Rate5.00% annually on or after 01.08.2020
(5.75% annually till 31.07.2020)
Issue DateIssue Opening Date : 1 Apr 2020
Issue Closing Date : 31 Mar 2021
Minimum Application SizeTwo Bonds of Rs. 10,000 each. (i.e. Minimum Rs. 20,000)
Maximum Application Size500 Bonds of Rs. 10,000 each in a financial year.
(Subject to provision of section 54EC of Income Tax Act, 1961, as amended)
Cheque/ Draft to be drawn in the name of" REC Limited - 54 EC Bonds " or
"Rural Electrification Corporation Limited - 54 EC Bonds "
Date of AllotmentLast day of each month in which the subscription money is received and credited to REC 54 EC collection account
Interest Payment & DateAnnually on June 30 of each year
Tenor5 Year
TrusteeSBICAP Trustee Company Limited - Mumbai
Banker to IssueAxis Bank, Canara Bank, HDFC Bank, ICICI Bank, IDBI Bank, IndusInd Bank and Union Bond

REC 54 EC Allotment Process-

Payment received from the investor’s, between 1st to 15th every month, the allotment will be done on 30th /31st of every month and bonds will be credited/dispatch within a week’s time, from the date of allotment.

Payment received from the investor’s, between 16th to 30th / 31st of every month, the allotment will be done 15th of subsequent month and the bonds will be credited / dispatch within a week’s time, from the date of allotment.

Issue of Non-convertible, Non-cumulative , Secured, Redeemable, Taxable Bonds in the nature of Debentures of Rs. 10,000 each for cash at par with benefits U/S 54EC of the Income Tax Act 1961, on Private Placement – Series XXI – On Tap Basis.

IssueNHAI Capital Gains Tax Exemption Bonds- Series XXI
Credit Rating'ICRA AAA' by ICRA Limited
'CARE AAA' Stable by CARE Rating Limited
'CRISIL AAA/stable' by CRISIL Limited
IND AAA/stable by India Rating (Fitch)
Face ValueRs. 10,000 per bond
Coupon Rate/ Interest Rate5.00% annually on or after 01.08.2020
(5.75% annually till 31.07.2020)
Issue DateIssue Opening Date : 1 Apr 2020
Issue Closing Date : 31 Mar 2021
Minimum Application SizeOne Bonds of Rs. 10,000 each. (i.e. Minimum Rs. 10,000)
Maximum Application Size500 Bonds of Rs. 10,000 each in a financial year.
(Subject to provision of section 54EC of Income Tax Act, 1961, as amended)
Cheque/ Draft to be drawn in the name of
Date of AllotmentLast day of each month in which the subscription money is received and credited to NHAI's collection account
Interest Payment & DateAnnually on Apr 1st of each year & Final Interest at the time of Maturity
Tenor5 Year
TrusteeIDBI Trusteeship Services Limited - Mumbai
Banker to IssueAxis Bank, Canara Bank, HDFC Bank, ICICI Bank, IDBI Bank and Union Bond

Issue of Non-convertible, Non-cumulative , Secured, Redeemable, Taxable Bonds in the nature of Debentures of Rs. 10,000 each for cash at par with benefits U/S 54EC of the Income Tax Act 1961, on Private Placement – Series IV – On Tap Basis.

IssuePFC Capital Gains Tax Exemption Bonds- Series IV
Credit Rating'ICRA AAA' by ICRA Limited
'CARE AAA' Stable by CARE Rating Limited
'CRISIL AAA/stable' by CRISIL Limited
Face ValueRs. 10,000 per bond
Coupon Rate/ Interest Rate5.00% annually on or after 01.08.2020
(5.75% annually till 31.07.2020)
Issue DateIssue Opening Date : 1 Apr 2020
Issue Closing Date : 31 Mar 2021
Minimum Application SizeTwo Bonds of Rs. 10,000 each. (i.e. Minimum Rs. 20,000)
Maximum Application Size500 Bonds of Rs. 10,000 each in a financial year.
(Subject to provision of section 54EC of Income Tax Act, 1961, as amended)
Cheque/ Draft to be drawn in the name of
Date of AllotmentLast day of each month in which the subscription money is received and credited to REC 54 EC collection account
Interest Payment & DateAnnually on July 31 of each year & balance along with redemption
Tenor5 Year
TrusteeBeacon Trusteeship Limited
Banker to IssueCanara Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, IndusInd Bank

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