What are 54EC bonds and how can I invest in them?

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What are 54EC bonds and how can I invest in them?

54EC bonds are capital gain bonds that help in reducing the amount of tax one needs to pay towards his capital gains. These fixed income instruments provide cap

54EC bonds are capital gain bonds that help in reducing the amount of tax one needs to pay towards his capital gains. These fixed income instruments provide capital gain tax exemption under Section 54EC to the bondholder.

An investor can reduce his tax liability on long-term capital gains derived from the sale of an asset (land or building) that he has held for more than two years. Investors can invest this gain in 54EC bonds within six months of the date of the sale of the immovable property to claim tax exemption.

Who issues 54EC Bonds?

54EC bonds are issued by government-backed infrastructure companies, hence, they are relatively safer bonds. The bond owners are creditors or debtholders to the bond issuers. The securities that fall under the 54EC bonds category are:

Bonds issued by the Rural Electrification Corporation Limited, known as REC Bonds

Bonds issued by the National Highway Authority of India, known as NHAI Bonds.

Bonds issued by the Indian Railway Finance Corporation Limited, known as IRFC Bonds.

Bonds issued by the Power Finance Corporation Limited, known as PFC Bonds.

54EC Bonds

issues 54EC Bonds

How to get tax exemption under 54EC Bonds?

An investor needs to invest in the bonds covered under section 54EC to get a tax exemption on his capital gains. He has to make this investment within six months of the sale of his immovable asset, i.e., land and building.

For example, if an investor sells off the property on 1st January 2022 and earns a capital gain of Rs. 15 lakhs on it, he needs to invest Rs. 15 lakhs in 54EC bonds before 1st July 2022 to be eligible for the tax benefits.

How to invest in 54EC Bonds India?

There are multiple ways in which an investor can invest offline and online in 54EC bonds in India. 54EC bonds are not traded in the stock market, and the investor can buy them from the issuer in physical or electronic form. You can invest in 54EC bonds in the following ways:

54EC bonds have a lock-in period of five years, and you can invest an amount of up to Rs. 50 lakhs in these bonds. Visit Bonds India to get Invest through a broker

Investors can buy 54EC bonds through a broker authorised for the same. To buy a 54EC bond through a broker, fill out the application form with the broker and submit it along with the required documents and the payment for the bond’s price. However, the broker will charge a brokerage for this facility.

Direct investment

Investors who do not want to buy 54EC bonds through a broker can also buy them directly on their own. Investors need to download the form online, fill it up, and attach the relevant documents along with it. They need to make the payment for the beyond through a demand draft or an account payee cheque drawn in favour of the issuer. Buyers can also deposit the bond’s price directly into the issuer’s account through NEFT/RTGS fund transfers. This process can be cumbersome as the investor needs to fill the form and submit the documents, form, and money on his own.

Invest through online platforms

One of the most popular ways of investing in 54EC bonds is through online platforms. Bonds India is one such online platform from which investors can buy 54EC bonds. BondsIndia offers all the latest bonds available for investment to the public. It also gives the latest news and insights about bonds to investors to help them in making informed decisions. Investing through online platforms is convenient and reliable.

market insights about various bonds and invest in 54EC and other bonds.