Capital Gain Bonds are investment instruments issued by government-backed entities that provide tax exemption on long-term capital gains under Section 54EC of the Income Tax Act. These bonds are designed to help you defer capital gains tax liability while earning a fixed interest rate over a specified tenure.
Types of Capital Gain Bonds
REC Capital Gain Bonds
- Issued by Rural Electrification Corporation (REC)
- Offers a fixed interest rate with a maturity period of 5 years
NHAI Capital Gain Bonds
- Issued by National Highways Authority of India (NHAI)
- Provides a fixed interest rate with a lock-in period of 5 years
Features of Capital Gain Bonds
Tax Benefits
- Exemption from long-term capital gains tax up to a specified limit
Government Backing
- Issued by reputed government entities ensuring safety and reliability
Fixed Returns
- Earn a stable interest rate throughout the bond's tenure
Lock-in Period
- A mandatory lock-in period of 5 years to avail tax benefits
Investment Limit
- Minimum investment amount is INR 10,000 with a maximum limit up to INR 50 lakhs per financial year
Benefits of Investing in Capital Gain Bonds
Tax Efficiency
- Significant tax savings by investing in bonds under Section 54EC
Low Risk
- Government-backed bonds offer a secure investment option
Guaranteed Returns
- Fixed interest rates provide predictable income
Simple Process
- Easy to invest and manage without complex procedures
Investing in Capital Gain Bonds with GG Money Spinner can be a strategic move to save on taxes while ensuring a steady return on your investment. These bonds offer a safe and reliable way to defer capital gains tax, making them an attractive option for investors.