Salient Features of 54 EC BONDS
Curated by isolating each cash flow from a Government security!
G-SEC STRIPS let investors hold and trade the individual interest and principal components of eligible Government Treasury notes and Government Bonds as separate securities
Created by isolating each of the cash flows from a Government security.
Tenure
Lock-in period
of 5 Years
Rate of Interest
5%
Per Annum
Taxability
Taxable Interest
No TDS deducted
safety
AAA rated Highest Safety
NON-TRANSFERABLE
For a period of
5 Years
max. investment
Rs. 50L
In a financial year
Who can invest in 54 EC Bonds?
Individuals
Individuals who have sold their property and received capital gains
Members of HUF
Hindu Undivided Family can make investments through the Karta of the family
54EC Bonds involve tax exemptions on long-term capital gains for investors who have sold their properties.
The investment should be made within six months from the date of sale. The investment for individual investors is capped at Fifty lakhs. For partnership businesses, each partner qualifies to invest Fifty lakhs.
Additional Information for Investors
As per Section 54 EC of the Income Tax Act, 1961:
- 54EC Bonds are eligible for Long Term Capital Gain only if the assets (land,building or both) are held for a minimum period of 3 years before transfer of asset.
- Investment Details: The 54EC Bond must be purchased within the period of six months from the date of sale/transfer of asset. The maximum investment allowed in a financial year is Rs 50 Lakhs.
- Lock in Period: 54EC Bond have a lock in period of 5 years, thus the bond cannot be transferred within 5 years from the day of purchase.
- Interest Rate and Taxability: The interest rate on this bond is 5% payable annually. TDS is not deducted from the interest on this bond; however it shall be included in the total income of the assessee.
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