Features of 54EC bonds

54EC capital gain bonds are the fixed income finance instruments which are entitled for the tax exemption u/s 54EC, benefitting the investor.

• Capital gain bonds are non-transferable as well as non-negotiable bonds.
• TDS on the investment in capital gain bonds is exempted. The interest earned on these bonds investment is taxed.
• CG bonds are AAA rated by the rating agencies- ICRA, CRISIL, India Ratings and Research Private Ltd.
• Minimum tenure for the 54EC capital bonds is 5 years.
• Minimum Investment is Rs. 10000/-
• Maximum investment in capital gain bonds allowed is ₹50,00,000 for per financial year
• Maximum CG bonds buying limit is 500 bonds. Each bond at ₹10000.
• The lock-in period will be 5 years with effect from April 1, 2019.
• Annual interest rate at 5.25%
• Available in Physical as well as demat form

Benefits of Investment in Capital gain bonds

• Safety: All the 54EC bonds are issued by the public sector companies. In these bonds, Government of India is the major stakeholder. This eliminates/dilutes the risk of interest- ensuring on time payments to the bond investors.
• Liquidity: Because the capital gain bonds are non-transferrable and are for fixed tenure of 5 years, the liquidity option is unavailable on the cg bond investment.
• Returns: Capital gain bond interest rate is 5% and it is the fixed income instrument to exempt the long term capital gain tax. The TDS on the bond investment is exempted. Only the tax over interest earned on the total bond investment is levied to the investor.