Why invest in Capital Gains Bonds (54EC Bonds)?
As the reader might already be aware, LTCG in India tends to be quite high. To avoid the LTCG tax on the profitable sale of immovable property, the Government has provided the provision of opting for Capital Gains Bonds (54EC Bonds). Since these are backed by the Government, these instruments are safe and provide good benefits in exchanges for a tenure of just 5 years.
Advantages of investing in Capital Gains Bonds (54EC Bonds)
The primary benefit of Capital Gains Bonds (54EC Bonds) is the tax benefit. You can invest up to ₹ 50 lakhs, which has to originate from capital gains arising out of the sale of immovable property in the last 6 months. The tenure is 5 years and they are rated AAA. The Corporations that issue these Bonds are:
- Rural Electrification Corporation (REC)
- National Authority of India (NHAI)
- Power Finance Corporation (PFC)
- Indian Railways Finance Corporation (IRFC)