Bonds/NCDs >> Capital Gain Bonds

 
 
Capital Gain Bonds
 
Capital Gain Bonds are instruments offering you tax exemption for transferring gains of long term capital assets. As per provisions of Income Tax Act, 1961, any long term capital gains arising from transfer of any capital asset would be exempt from tax under Section 54 EC of the Act if:
  •   The entire capital gain realized is invested within 6 Months of the date of transfer in eligible bonds
  •   Such investment is held for 3 Years
  •   To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be on security of such bond with 3 years from date of acquisition else, the benefit would be        withdrawn.
  •   If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.
 
The eligible bonds under Section 54EC are;
  • National Highways Authority of India (NHAI)
  • Rural Electrification Corporation Ltd. (REC)

 

Company Name Coupon Rate Rating Tenure Tax Status Tax Benefit Face Value Of Each Bond Minimum Application Maximum Application Mode Of Interest Transferability
     NHAI                              6%                                AAA                             3 Years                        Taxable                          SEC 54EC                     INR 10,000/-  INR 50,000/-(Five Bonds) INR 50,00,000/-    Annual                    Not Allowed
REC 6% AAA 3 Years Taxable SEC 54EC INR 10,000/- INR 10,000/- (One Bond) INR 50,00,000/- Annual Not Allowed