54EC Capital Gain Bond
Table of Contents
54EC Capital Gain Bond
Investment in 54EC capital gain bond helps to save tax on long term capital gain. Only long term capital gain is considered for exemption for investment in bond. Short-term capital gain is not allowed for exemption u/s 54EC.
Features of 54EC Capital Gain Bond
Features of capital gain bonds are as follows:
- Secure: Bonds are secured with highest rating
- Interest: Interest on bond is taxable.
- No TDS: No TDS is deducted on interest payout.
- Tenure: Bonds have lock-in period of 5 years and are non-transferable.
- Investment amount: Investment in bond starts from Rs 10,000/- and goes upto Rs 50 Lakhs.
- Interest Rate: Rate of interest varies and payable annually.
Benefits of 54EC Capital Gain Bond
Benefits of capital gain bonds are as follows:
- Tax efficient: Investment in bond is considered for exemption on long term capital gain.
- Secured: Bonds are secured and backed by Government
- Interest: Interest income is earned by the investment in this bond.
Maximum amount of investment in bond
Rs 50 Lakhs is maximum amount of exemption allowed for investment in capital gain bonds u/s 54EC.
Amount of Exemption
The amount of exemption is lower of the followings:
- Amount of capital gain arising on transfer of capital assets;
- Amount invested in capital gain bond under section 54EC.
FAQs relating to Capital Gain Bond
The FAQs relating to Capital Gain Bond are as follows:
Who can exemption under section 54EC of Income Tax
Any person can claim exemption under section 54EC.
Which capital asset – Short-term or Long-term is eligible for exemption
Long-term capital gain is eligible for exemption on investment in capital gain bond.
Which specific asset is eligible for exemption?
Any long-term capital assets (Land or building or both) is eligible for exemption.
Will I get exemption u/s 54EC & deduction u/s 80C?
If the investment amount in bond is allowed as exemption u/s 54EC, then the same will not be covered u/s 80C.
Why to invest in 54 EC bonds?
One can save long term capital gain tax by investing this bond.
What is the mode of application?
Application for investment in bond can be made by filling physical forms.
What are the modes of payment?
Payment mode can be cheque or DD or RTGS
Can I claim capital gain exemption by investment in bonds?
Yes, the exemption on long term capital gain is allowed on investment made in capital gain bonds.
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