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54 EC Bonds

54EC Bonds

Save Capital Gains with 54EC Bonds

Invest in government-backed bonds to secure tax exemption on long-term capital gains.

54EC Bonds

Insurance Protection

54EC bonds are issued by specified public-sector undertakings (PSUs) and allow you to claim exemption from long-term capital gains tax (LTCG) when gains from selling long-term capital assets (like land or buildings) are reinvested in these bonds.

Key Eligibility & Conditions

  • The gain must come from selling a long-term capital asset like land or building.
  • Investment must be made within 6 months from the date of transfer.
  • Eligible issuers include REC, PFC, IRFC, and other govt-approved PSUs.
  • Maximum investment allowed for exemption: ₹50 lakh per financial year.
  • Bonds have a 5-year lock-in period.
  • Partial investment gives proportional exemption.

Features of the Bonds

Minimum InvestmentTypically one bond (face value around ₹10,000).
Maximum LimitUp to ₹50 lakh in a financial year.
Interest RateGenerally 5.0% – 5.25% p.a. (taxable).
Taxable InterestInterest is taxed as normal income; often no TDS.
High Credit RatingUsually AAA-rated due to PSU backing.
Non-TransferableCannot be pledged, transferred, or used as collateral during lock-in.