CAPITAL GAIN BONDs/54 EC BONDs

Category: Finance

What are Capital Gain Bonds? The Capital Gain Bonds help in saving long term Capital Gain Tax on the sale of property. These are issued by PSUs and investment made by these bonds is highly safe. Why to invest in Capital Gain Bonds? By investing their long term capital gain taxpayers can save tax and earn interest on investment in capital gain bonds. The Income Tax Act contains several provisions that provide assessees with relief on capital gains or profits earned. One such section is section 54 EC, which provides for relief to the assessee on the capital gains earned provided the profits are invested in the specified bonds. For the purposes of this section, the bonds issued by REC, PFC, and IRFC are specified. These bonds are fixed-income instruments known as capital gain bonds. Sean these bonds are backed by the government, there is no risk involved. In a financial year, the maximum limit for investing in 54EC bonds is Rs. 50,000,000. Who can invest: Apart from resident individual, Hindu Undivided Families and Non resident Indians and approved institutions can also invest in these bonds. Availibity: You can hold these bonds both in Demat and Physical mode. Where to buy? : Applications are available on our site www.rrfinance.in. For any clarification you can mail to fd@rrfcl.com and contact on the number 8178998158. Tenure and Redemption: These all bonds have Lock in Period of 5 years. Interest Rate: Interest rate for the bonds is 5.00%. Investment amount: You can invest with minimum amount of 20,000/-(2 bonds) and maximum 50 lakhs (500 bonds). Allotment: The allotment happens on the last date of each month which the subscription amount is realized and credited into the institutes account but it would take around 45 days for bond to reach you through post. Tax: The good thing about these bonds is that the interest they pay is not tax deductible at the source. The interest on these bonds, however, is taxable. You need to pay tax on the interest income. Transfer: Non transferable. Other Details: You can hold them in the name of single holder as well as on joint basis. In case you make separate applications, individually or jointly, the aggregate investment should not exceed 50 lakhs, or both of you may lose the benefit under section 54 EC. Structure: Credit rating: “AAA/STABLE” by CRISIL Face value: Rs. 10,000/- per Bond Issue price: Rs. 10,000/- per Bond Minimum application size: 2 Bonds of Rs. 20,000/- Maximum application size: 500 Bonds of each Rs. 10,000/- per Bond. Mode of subscription: 100% on application. Deemed date of allotment: last day of each month. Maturity: 5 years from the deemed date of allotment. Interest payment: Annual. Coupon rate: 5.00%.