Investors can compare them with FDs, PPF, and Debt Mutual Funds for returns. Tax implications include exemptions on long-term gains and taxable interest income. These bonds are suitable for tax-saving and conservative variance analysis definition investors seeking safety.
Advantages and Disadvantages of 54EC Bonds
If you want to purchase, you must do it within 6 months of transferring the asset. The minimum amount to invest is Rs 10,000 and maximum Rs 50 lakhs. Capital gain bonds come with zero risks of repayment and interest. Your annual income from interest earned on these bonds is guaranteed by the government of India. If you are selling your property and are looking for ways to avoid having to pay taxes, look no further than the 54EC bonds.
Section 54EC bonds, also known as Capital gain bonds are fixed income instruments which provide capital gains tax exemption under section 54EC to the investors. You can receive tax exemption under IT section 54EC by investing in these bonds. However, the interest earned is taxable as per the income tax slab. You will need to declare capital gain from 54EC bonds under your return filing since no tax is deducted at the source.
Capital Gains Exemption – Section 54EC
- Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.
- Section 54EC bonds, also known as Capital gain bonds are fixed income instruments which provide capital gains tax exemption under section 54EC to the investors.
- However, you need to buy these bonds within six months of selling property.
Arming yourself with the exhaustive handbook places you in an informed position regarding the suitability of 54EC bonds in your investment portfolio. CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law. It important to noted here that in case the assessee has taken any loan or advances against the long term specified asset, then, the same would be deemed as converted into money on the date on which such loan or advances is taken.
Understanding Capital Bonds: A Comprehensive Guide to 54EC Bonds for Indian Investors
Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. Any individuals, including Non-Resident Indians, and HUFs can apply for these bonds to get capital gains tax exemption. However, you need to buy these bonds within six months of selling property. Since these bonds are used to receive exemption on capital gains from sale of an asset held for a long period, you can invest in 54EC bonds if you have received capital gain from selling a property. In case if the capital gain bonds are converted into cash before the period of maturity, then the amount so invested on which tax exemption was claimed, shall be taxable as long-term capital gain in the year of conversion.
If you have received capital gain from selling a property, you can invest in these bonds to avoid paying capital gain tax. Selling your capital assets for a generous amount of profit is surely a moment of joy, but it also comes with capital gains taxes. However, there are various ways to avoid this tax or minimize your capital gains tax liability. One such way is to invest your capital gains in capital gains bonds specified under section 54EC of the Income Tax Act. This guide will cover all that you need to know about capital gains bonds under section 54EC of the Income Tax Act. 54EC bonds are specifically meant for investors earning long-term capital gains and would like to get exemption on these gains.
In addition, capital bonds offer dual benefit of wealth creation and tax saving. If you have any doubts or queries and want specialized advice from experts at SBNRI, contact us using the button below. With just over a few months left in the current tax year, many of us would already be doing year end tax planning and sussing out options to invest to either gain a tax deduction or tax exemption. We all have Rs.150,000 covered under section 80C in the form of PF or FDs or like.
Before we go into further details about reinvesting in 54EC bonds, let’s look at what section 54EC of the Income Tax Act talks about. Capital gain not to be charged on investment in certain bonds. Since the interest rate on these bonds are fixed, there is no need to keep an eye on interest rate fluctuation. We collect, retain, and use your contact information for legitimate business purposes only, to contact you and to provide you information & latest updates regarding our products & services. We do not sell or rent your contact information to third parties.
