Bonds

Capital gain tax exemption bonds (U/S 54EC):- FY2018 - 2019

( Avail Tax benefit U/s 54EC of Income tax Act)

Capital Gain Bonds are being issued as 'Long term specified assets' within the meaning of Sub-Section 54-EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54 EC may invest in these bonds. Capital Gains arising from transfer of Long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax.

Provisions of section 54EC

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 54EC of the Act if:

  • The entire capital gain realized is invested within 6 months of the date of transfer in eligible bond.
  • 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or advance can be taken on security of such bond within 3 years from date of acquisition else, the benefit would be withdrawn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

FEATURES

Features IRFC(Indian Railway Finance Corporation Ltd.) Series II PFC (Power Finance Corporation Ltd) Series II REC (Rural Electrification Corporation Ltd) Series XII NHAI (National Highways Authority Of India) Series XIX
Rating "AAA/Stable" by CRISIL, "AAA"by ICRA, &'AAA' by CARE "AAA/Stable" by CRISIL, "AAA"by ICRA, &'AAA' by CARE "CARE AAA,CRISIL AAA,IND AAA" "CRISIL AAA/Stable" by CRISIL
Coupon / Interest Rate/Yield 5.75% p.a. 5.75% p.a. 5.75% p.a. 5.75%p.a.
Tax Status Taxable Taxable Taxable Taxable
Tax Benefit SEC 54 EC SEC 54 EC SEC 54 EC SEC 54 EC
Minimum (Rs.) 20,000 20,000 20,000 10,000
Maximum (Rs.) 50 Lacs 50 Lacs 50 Lacs 50 Lacs
Tenure 5 Years 5 Years 5 Years 5 Years
Mode of Interest Annual Annual Annual Annual

Goverment of India (GOI) 7.75% Savings (Taxable) Bonds

Effective from 10th January'2018, the Government of India replaced 8% Government of India Savings (taxable) bonds, with new 7.75% Government of India Savings (taxable) bonds.Since bonds are issued on behalf of the Government of India, it is the safest investment any investor can look for. Interest on the Bonds will be taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder.Tax will be deducted at source (TDS) while interest is paid.

Features of RBI Bonds

   
Types of Bonds Taxable Bond
Issuer Government OF India
Min Invest Amt Rs 1000/-
Max Invest Amt No Limit
Interest 7.75% p.a
Type of Bonds Cumulative & Non-Cumulative
Tenure 7 Years
Type Of A/c Bond Ledger A/c
Nomination Facility Available
Transferability Not Transferable
Eligible Investors Individual & HUF
Tax Interest is Taxable & also TDS is applicable