Lalwani Insurance And Investment Consultants
INSURE & BE SECURE
BONDS
GOVT. OF INDIA FLOATING RATE SAVINGS BONDS (RBI BONDS)
Interest rate
The interest rate is reset every six months on January 1 and July 1, and is linked to the National Savings Certificate (NSC) rate. The interest rate for July- December 2024 is 8.05%.
Lock-in period
The lock-in period depends on the investor's age: 7 years for investors up to 60 years old, 6 years for investors between 60-70 years old, 5 years for investors between 70-80 years old, and 4 years for investors 80 years and older.
Eligibility
Individuals, joint holdings, and Hindu Undivided Families are eligible to invest in these bonds, but not Non-Resident Indians (NRIs).
Other features
The bonds have a minimum investment of ₹1,000 and a maturity period of seven years from the date of issue. They are not tradeable on the secondary market and cannot be used as collateral for loans.
Taxation
The interest earned on these bonds is taxable, and TDS is deducted at the time of interest payment.
54EC CAPITAL GAIN BONDS
Capital Gains Bond, also known as Sec 54 EC Bonds, are a type of investment instrument authorized by the Income Tax Act, 1961. These bonds provide an opportunity for individuals to save on long-term capital gains taxes incurred from the sale of property or assets. By investing in these bonds, you can defer the payment of capital gains tax and enjoy the potential benefits of a reliable investment option.
Provisions of Section 54EC
As per provisions under section 54EC of Income Tax Act, 1961, any long term capital gains arising from transfer of any capital asset would be exempted from tax if:
The asset being sold is a Long Term Capital Asset, which includes land or building or both. (The asset is considered long-term if the taxpayer has held it for a minimum of 24 months prior to the sale).
The entire capital gains realized is invested within 6 months of the date of transfer in eligible Sec 54 EC Bonds.
Such investment is held for 5 years and the bonds so acquired cannot be transferred or converted into money or any loan or advance can be taken on security of such bond within 5 years from date of acquisition else, the capital gain exemption benefit would be withdrawn
If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempted from tax.
The total investment amount cannot exceed INR 50 lakhs during the current financial year and the subsequent financial year.