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Start Investing in Capital gain bonds - 54ec Bonds

Know More
About Bonds

Online Bonds

A Bond is a debt instrument issued for the purpose of raising capital by borrowing.
Bonds can be issued by companies, financial institutions or the government. Bonds issued by the government are considered the safest bonds.
Bonds can be divided into different categories based on tax status, credit rating, issuer type and maturity.
Bonds are suitable for regular income purposes.
Specific tax saving or tax free bonds are available that offer certain tax benefits to the investor.

Floating Rate Savings Bonds, 2020 (Taxable)

The government has launched Floating Rate Savings Bonds, 2020 (Taxable) with an interest rate of 7.15 per cent. The bonds are available for subscription July 1, 2020 onwards. The interest rate on these bonds will be reset every six months, the first reset being on January 01, 2021

Tenure	ROI(%) P.A	Issue Price	Payable
7 Years	7.15%(Reset on 1st Jan & 1st July)	Rs.1000	Half Yearly

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Salient Features

Eligibility for Investments
The Bonds may be held by An individual, not being a Non-Resident Indian (NRI) , A Hindu Undivided Family.

Limit of Investment
There will be no maximum limit for investment in the Bonds.

Tax Treatment
Interest on the Bonds will be taxable under the Income-tax Act, 1961as amended from time to time and as applicable according to the relevant tax status of the Bonds holder.

Issue Price
The Bonds will be issued at par at Rs.100/-for a minimum amount of Rs.1000/- (face value) and in multiples thereof.

Date of Issue
The Bonds will be issued, in electronic form and credited to the Bond Ledger Account (BLA) of the Investor/s on the date of the tender of cash or the date of realization of draft/cheque/funds.

Subscription
Subscription to the Bonds will be in the form of Cash (uptoRs.20,000 only)/drafts/cheques or any electronic mode acceptable to the Receiving Office
- Subscription to the Bonds will be in the form of Cash (uptoRs.20,000 only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.
- Cheques or drafts should be drawn in favour of HDFC Bank RBI Floating Rate Saving Bond 2020 (Taxable) and payable at the place where the applications are tendered.
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Nomination
A sole holder or all the joint holders (investors) of Bonds, being individual/s, may nominate in Form C or as near thereto as may be, one or more persons who in the event of death of sole holder / joint holder, as the case may be, would be entitled to the Bonds and to the payment thereon.

Transferability
The Bonds in the form of Bond Ledger Account shall not be transferable except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds.

Interest Rate(Floating)
The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year.
- The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year.
- The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021.
- The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021. There is no option to pay interest on cumulative basis.
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Tax Deduction at Source
Tax deducted at source while making payment of interest on the bonds from time to time and credited to Government Account.
- Tax deducted at source while making payment of interest on the bonds from time to time and credited to Government Account.
- Provided that tax will not deducted while making payment of interest/maturity proceeds as the case may be to individual/s who have made a declaration in the application form that they have obtained exemption from tax under the relevant provisions of the Income Tax Act, 1961 as amended from time to time and have submitted a true copy of the certificate obtained from Income Tax Authorities.
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Repayment/Tenor
The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue.
- The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue.
- II. Premature encashment in respect of the Bonds be allowed for individual investor in the age group of 60 years and above, subject to submission of document relating to the date of birth of the investor in support of age to the satisfaction of the issuing bank, after minimum lock in period from the date of issue as indicated below:
  
  a. Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.
  b. Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.
  c. Lock in period for investors in the age bracket of 80 and above years shall be 4 years from the date of issue.
- III. In case of join holders or more than two holders of Bonds any one of the holder of bonds any one of the holders shall fulfill the above conditions of eligibility.
- IV. After aforesaid minimum lock in period from the date of issue an eligible investor can surrender the bonds any time after 12th 10th and 8th half corresponding to the respective lock in period but redemption payment will be made on the following interest payment due date. Thus the effective date of premature encashment for eligible investor will be 1st January and 1st July every year. However, 50% of interest due and payable for the last six months of the holding Period will be recovered in such cases.
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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 'long-term specified asset' and are issued by REC, NHAI, PFC and IRFC.
These bonds are specifically for investors 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 gain 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 of 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 Cooperatives, NGOs and Private Power Developers.
The company is listed on both National Stock Exchange and Bombay Stock Exchange.
Business operations in India are supported by a network of 13 Project Offices and 5 Zonal Offices, headquartered in New Delhi.

Rural Electrification Corp Bonds

Company Name	Rating	ROI (%)	Tenure	Minimum Application	Maximum Application	Tax Status	Transferability	Mode of Interest	Interest Payable on
REC	AAA	5.00%	5 years	20000 (2 bonds)	5000000 (500 Bonds)	Taxable	Not Allowed	Annually	30th June

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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 Corporation in the Country.
It is the financial back bone of Indian Power Sector.
PFC's registered office is located at New Delhi and regional offices are located at Mumbai and Chennai.
It’s a consistently profit-making and dividend-paying company & also Strong asset quality reflected in low NPAs in the company.The company is listed on both National Stock Exchange and Bombay Stock Exchange

Power Finance Corporation Capital Gain Bonds Series I

Company Name	Rating	ROI (%)	Tenure	Minimum Application	Maximum Application	Tax Status	Transferability	Mode of Interest	Interest Payable on
PFC	AAA	5.00%	5 years	20000 (2 bonds)	5000000 (500 Bonds)	Taxable	Not Allowed	Annually	31st July

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IRFC Capital Gain Bonds Series I

Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets.
IRFC is a Schedule ‘A’ Public Sector Enterprise under the administrative control 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 and financial institutions.

Indian Railway Finance Corporation Capital Gain Bonds Series I

Company Name	Rating	ROI (%)	Tenure	Minimum Application	Maximum Application	Tax Status	Transferability	Mode of Interest	Interest Payable on
IRFC	AAA	5.00%	5 years	20000 (2 bonds)	5000000 (500 Bonds)	Taxable	Not Allowed	Annually	15th October

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Why SMC?

At SMC, we believe in growing with our clients and creating valuable relationships. It’s about having the passion to go that extra mile and it’s about making the clients and partners a part of the family.