Capital Gain Bonds

 Capital  Gain Bonds :- 

  •  In accordance with section 54 EC of the Income tax Act, 1961,all categories of tax payers would be eligible to save tax in respect of long term capital gains by making investments in certain Bonds prescribed.
  • These bonds are classified as 'lomng-term specified asset' and are issued by REC,NHAI,PFC and IRFC.
  • These bonds are specifically for investord who have made some long term capital gains, and would like to save capital gain taxes on this amount.
  • Only long term capital gains are eligible for these bonds though, and short term gains are not covered under section 54EC.
  • The interest from these bonds is fully taxable.

 Condition for Exemption from Tax U/S 54 EC:-

  • The entire capital gain realized is invested within 6 Months of the date of transfer in eligible bonds.
  • Such investment is held for 5 years.
  • To avail of capital gains exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be on security of such bond with 3 years from date acquisition else,the benefit would be withdrawn.
  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

 REC Capital Gains Bonds :- 

  • Rural Electrification Corporation Limited (REC) is a Navratna Company functioning under the purview of the Ministry of Power.
  • It's a public Infrastructure Finance Company in India's power sector.
  • The company finances and promotes rural electrification projects across India.
  • The company provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Coopratives, NGOs and Private Power  Developers.
  • Business operation in India are supoorted by a network of 13 project Offices and 5 Zonal Offices, headquartered in New Delhi.

 NHAI Capital Gain Bonds Series XII :- 

  • National Highways Authority of India (NHAI) is an autonomous agency og the Government of India, responsible for management of a network of over 50,000 km of National Highways out of 1,15,000km in India.
  • It is a nobel agency of the Ministry of Road Transport and Highways.
  • NHAI has sighed a memorandum of understanding(MoU) with the India Space Researchg Organization for satellite mapping of highways.
  • The Authority was opratinalized in February,1995.
  • The company is listed on both Nation Stock Exchange and Bombay Stock Exchange.

 PFC Capital Gain Bonds Series I :- 

  • The Power Finance Corporation Ltd. Incorporated on July 16th,1986,Company was conferred the title of a 'Navratna CPSE' in June,2007 and it's a leading Non-Banking Financial in the Country.
  • It is a financial back bone of india Power Sector.
  • PFC's registered office is located at new delhi and redional offices are located at Mumbai and Chennai.
  • It's a consistently profit-making and divident-paying company & also Strong asset quality reflected in low NP AS company. The company is listed on both National Stock Exchange and Bombay Stock Exchange.

 IRFC Capital Gain bonds Series 1 :- 

  • Indian Railway Finance Corporation (IRFC) was set up on 12 December,1986 sathe dedicated financing arm of the Indian Railways for mobilizing funds from domastic as well as overseas Capital Markets.
  • IRFC is a Schedule 'A' Public Sector Enterprise under the administrative conttrol of the Ministry of Railways, Govt.
  • In more than 30 years of existence, IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay.
  • Company raises money through financial bonds and from banks ans financial institutions.    

 Basics Information Of Capital Gain Bonds :-

  • What is the lock in period for capial gain bonds? :- Long-term capital gains (LTCG) tax from sale of property can be saved, on gains of up to Rs 50 lakh, by investing in capital gain tax  exemption bonds issued by certain Public Sector Undertakings (PSUs). These bonds have a lock-in;earlier the lock-in period was three years, since April 2018 it is five years.
  • How do I invest in capital gain bonds? :- Ataxpayer can invest a maximum Rs 50 lakh of the capital gains incurred in these bonds. Asper the webside of the issuers of 54ED bonds, i.e., NHAI,REC,PFC, the interest rate offered is 5.25 per cent which is patable annually. The interest date payment and minimum amount to invest varies.
  • Can REC bonds be redeemed before maturity? :- Futher, as per Section 54EC, you can invest capital gain Rs 50 lakh in long term specified bonds, likes that of NHAI and REC, within six months from date of transfer. Such bonds cannot be redeemed before five years from date of transfer.
  • Which bonds is better NHAI and REC? :- These capital gain bonds  which help in saving tax can only be issued by the National Highway Authority of India (NHAI) or the Rural Electrification Carporation of india(REC). The interest rat on the capital gains bonds is 5.75%. The interest @5.75% is payable annually by both NHAI as well as REC. 
  • Are capital gain bonds safe? :- Safe and Secure: 54 EC bonds are AAA rate. Interest on 54 EC bonds is taxable. No TDS is deducted on interest from 54EC bonds weath tax is exempted. 
  • How do I buy capital gain bonds online? :- 

  1. Various Bonds Availabe. Invest to save Capital Gain Tax.

  2. Dowuload application form. To Invest in Capital Gain Bonds.

  3. Click to invest online. Invest online in Capital Bonds.

  4. check Allotment Status. Know allotment status of your Bonds.

  • How do I encash NHAI bonds? :- For bond(s) held in physical Form: The bond will be automatically redeemed by NHAI on maturity, without the surrender fo Bond Certificate(s) by the Bondholder(s), on the expiry of 3 years from the deened date of allotment and the redemption proceeds would be paid by cheque or NECS/ECS to the bondholder whose name....
  • Is interest on NHAI bonds taxable? :- Both REC and NHAI bonds offer an interest rate of 5.75% per annum, payable annually. Interest earned from 54EC bonds is taxable; however, no TDS is deducted on interest. 54EC bondsare AAA rated bonds and are backed by the government; hence, the risk of interest and capital  payable is protected. 
  • How do you I withdraw money from my capital gain account? :- to withdraw money, you will need to give a written application to the bank,giving details of the purpose of your fund requirements. You need to use the funds from your CGAS account within 60 days for your house purchase or towards contruction.
  • Does capital gains count as income? :- Capital Gains and Dividends. ..Capial gains are profits from the sale of a capital asset, such as shares of stock, a business, a parcel og land, or a work of art. Capital gains are generally included in taxable income, but in most cases, are taxed at a lower rate.
  • interest on capital gain taxable? :- A: Interest on NHB/NABARD capital gains bonds is fully taxable. ..Exemption under Section 54EC for investment in capital gains bomds is available only if the investment in such bonds is made within six months after the date of transfer of the capital asset.
  • What is the capital gain under income tax act? :- Any Income derived from a Capital asset movable or immovable is taxable under the head Capital Gains under Income Tax Act 1961.  The capital gains have been divided in two parts under Income Tax Act 1961. One is short term capital gain and other is long term Capital gains.
  • How do I deposit into capital gain scheme? :- Capital gain account can be opened in any of the authorised bank branches excluding rural branches of authorised banks. procedure to open capital gains account and manner of deposits;: Capital Gains account can be opened by making an application in duplicate in Form A.
  • What is Section 54EC? :- Section 54EC of the Income Tax Act, 1961 lays down the provision that capital gains are exempt from tax, if the long-term capital gains are invested in specified investment instruments within a pre-defined time period. ..Exemptions under Section 54EC are only available on gains from transfer of long-term capital assets.
  • When should I invest in capital gain bonds? :- Investment in NHAI or REC bonds should be made within 6 months from the date of sale of the property or before filing their income tax returns.
  • Which bonds is better NHAI or REC? :- These Capital Gain Bonds which help in saving tax can only be issued by the National Highway Authority of India(NHAI) or the Rural Elecrification Corporation of India(REC). The Interest rate on the Capital Gains Bonds is 5.75%. The Interest @ 5.75% is payable annually by both NHAI as well as REC.                                                                                                                                                                                                                                                                                                                                                              

 Disclaimer :-

Meghama Capital ( Meghama Wealth Management Services ) Only act as between client and the company inviting or Accepting Capital Gain Bonds  , known as principle company, Naither company,Employee certified the information provided by the Principle Company and shall not be liable under any condition.

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