SEC 54EC BOND - CAPITAL GAIN BOND

Home / SEC 54EC BOND - CAPITAL GAIN BOND

54EC bonds, Commonly referred as capital gains bonds, are one of the ways to save long-term capital gain tax. 54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains.

According to section 54EC, any person (individuals, HUFs, partnership firms, companies etc.) can avail exemption in respect of long-term capital gains (arising from the sale of long term capital asset other than equity shares and securities), if the capital gain is invested in Capital Gain bonds. The exemption will be the amount of capital gain or the amount of investment made, whichever is lessThe exemption is subject to :

The investment is made within a period of 6 months from the date of transfer of the asset

Maximum investment limit of up to Rs. 50 Lakhs in a Financial Year per individual.

If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

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The eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited).

Key Features of 54EC Bonds

Safe and Secure : 54EC bonds are AAA rated and are issued by PSUs backed by Government of India.

Interest Rate : 54EC bonds offer 5% rate of interest payable annually.

Tax implication : Interest on 54EC bonds is taxable. The principle is tax free on maturity.

Tenure : 54EC bonds have a lock-in period of 5 years and are non-transferable.

Investment amount : Minimum investment in 54EC bonds is 1 bond amounting to Rs. 10,000 and the maximum investment in 54EC bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.

Mode of Holding : 54EC bonds can be held either in Physical form or in Demat Form.

Risk Factors – Investments in Mutual Funds are subject to Market Risks. Read all scheme related documents carefully before investing. Mutual Fund Schemes do not assure or guarantee any returns. Past performances of any Mutual Fund Scheme may or may not be sustained in future. There is no guarantee that the investment objective of any suggested scheme shall be achieved. All existing and prospective investors are advised to check and evaluate the Exit loads and other cost structure (TER) applicable at the time of making the investment before finalizing on any investment decision for Mutual Funds schemes. Gera Wealth Pvt Ltd deals in Regular Plans only for Mutual Fund Schemes and earn Trailing Commission on client investments. Disclosure For Commission is mentioned under the disclosure section. Details of the commissions that we receive from AMCs are provided separately under our Commission Disclosure section. Option of Direct Plan for every Mutual Fund Scheme is available to investors offering advantage of lower expense ratio. Gera Wealth Pvt Ltd is not entitled to earn any commission on Direct plans. Hence we do not deal in Direct Plans.

AMFI Registered Mutual Fund Distributor | ARN-147697 | Date of initial Registration: 12th June 2018 | Current validity of ARN: 11th June 2027.
AMFI Registered SIF Distributor | ARN–147697 | Date of initial Registration: 18 Sep 2025 | Current validity of ARN: 13-June-2028.
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