Irrespective of how you buy them, you must invest within 6 months of transferring the asset. The minimum investment allowed is Rs. 10,000 and maximum is Rs. 50 lakh. Investing in 54EC bonds requires fully understanding the terms, benefits, and limitations.
What are the Key Features of Capital Gains Bonds Under Section 54EC?
Capital gain bonds, also known as 54EC bonds, are tax exempt bonds that allow investors to enjoy tax exemptions, under section 54EC, on capital gains made from property sale. Investors can purchase 54EC bonds to reduce the long-term capital gains tax on income from sale of immovable property. 54EC bonds allow Indian investors to save taxes on long-term capital gains by investing in government-backed entities like PFC, IRFC, and REC. These bonds have a lock-in period of 5 years with interest rates around 5-6% per annum.
Investing in Bonds: A Guide to Fixed Income in the Indian…
Yes, NRIs can claim the exemption the exemption under section 54EC of the Income Tax Act. However, the land or building that has been sold to result in a capital gain should be located in India. You can buy these bonds online through the respective company’s website or contact a broker.
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- This way, you make most of your investments in 54EC bonds.
- Since these bonds are used to receive exemption on capital gains from sale of an asset held for a long period, you can invest in 54EC bonds if you have received capital gain from selling a property.
- 54EC Bonds are for investors looking to economise capital gain taxes.
- 54EC bonds are specifically meant for investors earning long-term capital gains and would like to get exemption on these gains.
- Tax implications include exemptions on long-term gains and taxable interest income.
To qualify for exemption, taxpayer must invest within 6 months, up to INR 50 lakhs, for 5 years. Recent Budget 2024 changes rates for short & long-term capital gains. You can invest capital gains arising from sale of assets such as land or building up to Rs. 50 lakh in capital gains bonds to avail tax exemptions under Section 54EC. Are you looking to sell your property but are worried about paying tax for gains?
When a taxpayer sells long-term immovable property (land or building or both), they have the option to avail capital gain exemption under Section 54EC by investing in certain bonds. You can purchase these bonds after receiving a capital gain from selling a property. These bonds have five years lock-in period and interest payable annually at the rate of 5.75 percent. However, you will not be able to get the tax exemption benefits under section 54EC.
In the Budget 2024 FM Nirmala Sitharaman has proposed changes in the tax rate on short-term capital gains from 15% to 20%. And long-term capital gains on financial and non-financial capital assets will attract residual claim to assets definition tax at the rate of 12.5% instead of 10%, along with the same the tax exemption limit for the long term capital gains have been extended to Rs 1.25 lakhs. 54EC are capital gain bonds, that is used to receive the capital gain tax exemption.
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