Capital Gain Tax Exemption Bonds u/s 54 EC

(Avail Tax benefit U/s 54EC of Income-tax Act)

 

The gains that arise on the sale of land or building (residential or commercial) are known as Long Term Capital Gains and Capital Gains Tax is levied on such gains. However, such tax can be saved if this amount is invested in capital gain bonds specified under section 54 EC. REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and IRFC (Indian Railways Finance Corporation Limited), NHAI( National Highways Authority of India) are the bonds eligible under Section 54 EC. These bonds are issued by infrastructure companies that are backed by the government and carry the highest ratings from rating agencies, and are therefore considered as safest investments. Such bonds cannot be redeemed before five years from date of transfer. One cannot sell these bonds as they are not listed in the stock exchange. To avail the tax-exemption the investment must be made within 6 months of the date of sale of immovable property. Such investment can be redeemed only after 5 years. Before april 2018 the bonds could be redeemed within 3 years. You can hold 54EC bonds in Demat format or physical format.