Capital Gain Tax is levied on Capital Gains received from sale of a long term capital asset. This tax levied can be saved by the seller, if the sale proceeds are further invested in Capital Gain Bonds specified under Section 54EC within 6 months of receipt. The exemption from Capital Gains is possible only if the asset is sold after being held for 3 years or more. In case the asset is sold before 3 years, them it is considered as short term capital gain and is therefore subject to applicable taxation slab. The interest earned on Capital Gain Bonds is not subject to tax exemption. The interest earned is treated as part of the annual income and is therefore subject to the taxation slab as applicable for the investor. The interest earned on these bonds is payable annually and the funds are directly credited to the bank account of the investor. Rs. 50 lakh is the aggregate maximum exemption allowed under Section 54EC irrespective of the financial year, as per Budget 2014.

Can I sell these bonds? Capital Gain Bonds are non-transferable and non-negotiable. They cannot be pledged or offered as collateral / security while applying for a loan. No you cannot sell these bonds. Capital Gain Bonds are issued for a period of 5 years and as per Section 54EC, they cannot be sold before these 5 years. These bonds are not listed on the stock exchanges.

• Save Tax Invest your Long Term Capital Gain from sale of capital asset in these bonds within 6 months from sale of such asset to get tax exemption.

• Secure These are backed by Government making them a highly secure investment.

• Earn These bonds offer not only tax exemption, but also an assured return on the investment.

• Accessibility One can hold 54EC Capital Gain Bonds in any form, Physical or DEMAT.