Capital Gain Bonds

According to the Income Tax Act of 1961, Section 54EC of the Act exempts from taxation any long-term capital gains resulting from the transfer of any capital asset if:

Within six months of the transfer date, the total capital gain achieved is invested in permissible bonds.

Five years are invested in this investment.

The bonds so purchased cannot be sold, converted into cash, or used as collateral for any loan or advance within five years of the date of purchase in order to qualify for the capital gain exemption; otherwise, the benefit will be lost.

Only proportionate capital gains would be tax-free if the amount invested in bonds was smaller than the capital gains realised.

RECL (Rural Electrification Corporation Ltd.), NHAI (National Highways Authority of India), PFC (Power Finance Corporation Ltd.), and IRFC are among the issuers whose bonds qualify under Section 54 EC (Indian Railway Finance Corporation).

It is possible to invest up to Rs. 50 lakhs.

The investment block term for these 4 companies is 5 years.

Investment with zero risk.