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Capital Gains Bonds

Under Section 54 EC of Income Tax, 1961 an investor need not pay any tax on any long-term capital gains arising on sale of any asset, if the amounts of capital gains are invested in certain specified bonds. Rural Electrification Corporation Limited (REC) & National Highways Authority of India (NHAI) are permitted to issues capital gains bonds under Section 54 EC.
Some key features of Section 54 EC bonds are:
  • Highest credit rating of AAA by CRISIL, CARE and FITCH
  • Interest is taxable although no TDS is deducted
  • Lock-in of around 3 years and non- transferable
  • Minimum amount of investment Rs 10,000 and multiples
Features of NHAI Capital Gain Bonds Series XII
  • Rate of Interest 6.00% p.a. payable annually
  • Facility of Payment of Interest and Redemption through ECS
  • Bonds can be held in Demat /Physical Form
  • Automatic Redemption after 3 Years without surrendering Bonds Certificate
  • No TDS on Interest
Features of 54EC Bonds Series-VIII (2011-12)
  • Rate of Interest 6.00% p.a. payable annually on 30th June
  • Facility of Payment of Interest and Redemption through ECS
  • Bonds can be held in Demat /Physical Form
  • Automatic Redemption after 3 Years without surrendering Bonds Certificate
  • No TDS on Interest
  • On line viewing of Bonds Status from the dedicated web site http://rec.rcmcdelhi.com
  • Minimum Investment Rs 10000, Maximum Investment Rs 50 lakhs