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Capital Gain Bonds

Capital Gain Bonds

What are Capital Gain Bonds

54EC bonds or capital gain bonds can be described as financial instruments which provide tax exemptions under Section 54EC to an investor. Long-term capital gains (LTCG) tax arising from sale of property can be saved by investing in these bonds These are issued by certain Public Sector Undertakings (PSUs). These bonds have a lock-in of five years. The Current rate of interest available on these bonds is 5%, which is taxable.


  • Safe and Secure: 54EC bonds are AAA rated by ICRA, CARE and CRISIL
  • Tenure: Lock-in period of 5 years and are non-transferable.
  • Interest Rate: 5% payable annually.
  • Bonds eligible: REC (Rural Electrification Corporation), NHAI (National Highways Authority of India), IRFC (Indian Railway Finance Corporation) & PFC (Power Finance Corporation Ltd) offers the bonds eligible under Section 54EC.

Key Points to Note:

  • The Capital Gain amount should arise from the sale of property.
  • Investment should be made in these bonds within 6 months from the sale of property to avail the tax exemption benefit.
  • Minimum Investment can be made from Rs.10,000/- and maximum can not exceed Rs.50 Lakh in a Financial year.
  • Interest is paid annually and TDS is not deducted however.
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