54EC (Capital Gain) Bonds

54EC (Capital Gain) Bonds

Capital bonds are being issued as 'Long term specified assets' within the meaning of Sub- Section 54-EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54 EC may invest in these bonds. Capital gains arising from transfer of Long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax.

 

Normally these types of bonds are issued by the following government institutions

Rural Electrification Corporation (REC)

National High Way Authority  of India (NHAI)

 

The new issue would close in March 2014"

Bond

RECL

NHAI

Coupon/Interest rate/Yield

6%

6%

Rating

AAA / Stable (CRISIL)

AAA / Stable (CRISIL)

Tax Status

Tax Status

Taxable

Tax Benefit

SEC 54 EC

SEC 54 EC

Minimum (Rs.)

10,000

10,000

Maximum (Rs.)

50 Lakhs in a Financial Year across RECL & NHAI

50 Lakhs in a Financial Year across RECL & NHAI

Tenor

3 Years

3 Years

Interest Date

30th June

1st April

Put/Call/Premature Encashment

Bullet repayment at the time of Maturity

Bullet repayment at the time of Maturity

Mode Of Interest

Annual

Annual

 

54EC Bonds FAQs

  • Why invest in 54EC Bonds?

To save tax on Capital Gains

  • When to invest in Capital Gains Tax Exemption Bonds?

Within six months of occurrence of Capital Gains

  • Whether any TDS on interest?

No Tax deducted at source.

  • What is the lock in period for the bonds?

3 years from the date of allotment in terms of section 54EC of IT Act, 1961

  • What is the procedure for redemption of bonds?

·         Against Bonds allotted in Physical form - Surrender duly discharged original Bond Certificate(s) alongwith request letter.

·         Against Bonds allotted in Demat/Electronic form - Surrender copy of delivery
Or

·         Redemption is made automatically at the end of 3rd year from the date of allotment without surrender of bonds.

  • What is the procedure for transfer of bonds to nominee name?

The nominee has to produce the following documents :

·         Original bond certificate.

·         Original/attested Copy of Death certificate - English/Hindi version.

·         Attested copy of identity & address proof of Nominee i.e Passport/Election ID card/Driving License etc.(Enlish/Hindi version).

·         Signature and bank account details of Nominee duly attested by his/her banker with bank seal in original.

·         Copy of passbook attested by banker.

·         Copy of PAN card/Form-60 of Nominee.

·         Request leter signed by the Nominee.

  • What is the procedure for transmission of bonds to legal heir?

The legal heir has to produce the following documents :

·         Original bond certificate.

·         Original/attested Copy of Death certificate - English/Hindi version.

·         Attested copy of Succession Certificate or Letter of Administraion or Probated Will.

·         Notarised Disclaimer Letter on non-judicial stamp paper from the legal hiers in favour of claimant, if more that one legal hier.

·         Attested copy of photo identification & address proof of legal hier - Passport/Election ID card/Driving License etc.(Enlish/Hindi version).

·         Signature and bank account details of Legal Heir/claimant duly attested by his/her banker with bank seal in original.

·         Copy of PAN card/Form-60 of Legal Heir/claimant.

·         Request leter signed by the Legal Heir/claimant.

  • What is the procedure for name deletion on account of death of one of the joint holders?

The joint holder(s) have to produce the following documents :

·         Original bond certificate.

·         Original/attested Copy of Death certificate - English/Hindi version.

·         Present address & Bank details of Joint Holder.

·         Copy of passbook attested by banker.

·         Request leter signed by remaining holders.

  • What is the procedure for Issue of duplicate bond certificate?

The joint holder(s) have to produce the following documents :

·         Request Letter.

·         Copy of FIR in case of theft.

·         Indemnity Bond excuted on non-judicial stamp paper of Rs. 100/- with notary attestation.

·         Demand Draft for Rs. 500/- in the name of concerned Registrar of bond, payable at delhi for cost of advertisement.

  • What is the procedure for Issue of duplicate Interest/Redemption Warrant?

The holder have to produce the following documents :

·         Request Letter.

·         Indemnity Bond excuted on non-judicial Stamp paper of Rs. 100/- with notary attestation.

·         Copy of passbook attested by banker.

·         Present address and Bank details with supporting documents, if any change.

  • What is the procedure for Change of Address?

The holder(s) have to produce the following documents :

·         Request Letter duly signed by all the holders and attested by the holders' bank.

·         Attested copies of proof of identity (driving license, passport, PAN card and the like).

·         Attested copies of proof of new residence (front and back pages of the ration card, property agreement, latest electricity/telephone bills,passport and the like).

  • What is the procedure for Change of Bank Account Details?

The holder(s) have to produce the following documents :

·         Request Letter duly signed, alongwith letter from the banker attesting the security holder's signature and address.

·         Bank account statement/copy of passbook duly attested by Bank.

A leaf of cancelled cheque of the said account

Capital bonds are being issued as 'Long term specified assets' within the meaning of Sub- Section 54-EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54 EC may invest in these bonds. Capital gains arising from transfer of Long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax.

 

 

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