54EC bonds can be purchased by individuals as well as HUF members. Within six months after moving capital assets, you should invest in 54EC bonds. Take a look at the advantages of buying 54EC bonds.
Who is eligible to invest in 54EC?
The capital gains on the sale of a long-term capital asset whether an immovable property or shares and stocks are excluded from taxation provided the profit is invested by the taxpayer in ‘long-term defined assets’ within 6 months of the sale, according to Section 54EC. Government notified bonds and securities, such as those issued by the National Highways Authority of India (NHAI) and the Rural Electrification Corporation, are referred to as “long-term defined assets” in this context (REC).
However, you can only deposit a total of Rs. 50 lakh in these bonds. If your total capital gains exceed Rs. 50 lakh, instead of buying bonds under Section 54EC, you may wish to build a house and take advantage of Sections 54 or 54F. However, if you are unable to choose one of the above choices, you will be required to pay LTCG tax on the remaining capital gains.
The bonds purchased with the capital gains amount should be held for at least 5 years by the taxpayer. If you sell the bonds before the end of the 5-year period, the Section 54EC exemption will be revoked, and you will be required to pay LTCG tax on the initial capital gains amount.
Is it possible for non-residents to invest in 54EC bonds?
My home in India has been sold. Will the earnings from the property sale be taxed in India? If so, how much will it cost?
In India, capital gains from the sale of a property are almost always taxable. Non-resident Indians who own property in India are also affected. When a property is held for less than 24 months, gains from the sale are considered short-term. Long-term capital gains, on the other hand, are evaluated if the property has been owned for longer than 24 months (LTCG).
Short-term capital gains are taxed at the slab rates, whereas long-term capital gains are taxed at a rate of 20% after indexation. Before making a payment to an NRI, the buyer may deduct TDS. An NRI can also claim a capital gains tax exemption if the proceeds are used to buy or build a new home.
How do I invest in 54EC bonds using the internet?
This post will show you how to apply for 54EC Capital Gains Tax Exemption bonds online and pay using net banking or debit card, either through a broker or directly.
I intend to sell our previous residence. I’d like to put money into 54EC bonds. Is there a way to invest over the internet? I don’t want to reinvest in property and I also don’t want to pay taxes, thus I want to invest this money Amol Chavan
Our Answer: 54EC bonds are designed for investors who want to make long-term capital gains. You can obtain a tax break on long-term capital gains by investing in these bonds. They are known as 54EC bonds because they qualify for a tax deduction under section 54EC of the Income Tax Act.
The investor should have the following information and documents in PDF format ready before we begin the online process.
Karvy offers three bond issuers the ability to invest in 54EC bonds online.
1. Select the “For the bond issuer you like, click the “Fill a New Form Online” button.
2. Complete and submit the online application form.
3. Upon successful application submission, you will receive an SMS.
4. Fill out the application form completely.
5. Print the aforementioned form and have all applicants certify their signatures (s).
6. Scan the application copy, which has been signed by all applicants, and save it as a PDF.
7. Select the “Upload Application/KYC Documents” option should be selected.
8. To validate the application form, enter the following application details as they were supplied online.
9. Make a click “To receive an OTP on your email and mobile, click the “Get OTP” button.
10. Click on the OTP that was sent to your phone or email address “Verify.”
11. The application information will be displayed after validation.
12. To proceed with payment, please upload the following valid PDF documents.
13. Payment will be enabled once the above documents have been uploaded.
14. Use Netbanking or a Debit Card to make a payment.
15. Whether the payment is successful or unsuccessful, an acknowledgement will be prepared and sent through email.
Here is a little tutorial for investors who want to accomplish everything from application to payment without using a broker. The procedure for REC bonds has been described. Others, such as PFC and IRFC, go through a similar procedure.
1. Click here to download the REC bond form
2. Select the ‘direct’ option on the download page.
3. Enter the captcha after selecting the quantity of forms to download.
4. A ZIP file containing the form pack will be downloaded.
5. Once you’ve unzipped the file, you’ll see a PDF of the actual form (marked as private and confidential).
6. Complete the form and gather the necessary documentation on your own.
7. Investors must submit the completed Application Form, along with a Demand Draft or account payee cheque payable to “REC Ltd- 54EC” or “Rural Electrification Corporation Limited 54EC Bonds” and the required enclosures, to the designated branches of collecting banks Axis Bank, Canara Bank, HDFC Bank, ICICI Bank, IDBI Bank, IndusInd Bank, or Union Bank.
You can also make a direct NEFT/RTGS deposit into the REC collection account and fill out the application forms found on the REC website, making sure to include the UTR number in the box provided. Here are the bank account details for transferring funds.
G 3/4, 19 K G Marg, Surya Kiran Building, New Delhi 110001 is the branch address.
8. Visit http://www.recindia.nic.in/capital-gain-tax-exemption/ or call RTA/REC Investors Services Cell at 011-43091527 or 011-24361320 for allotment/ servicing status or any other information.
What is the best way to invest in NHAI and REC bonds?
What is the best way to buy Capital Gain Bonds? These Capital Gain bonds can be purchased directly the NHAI/REC or from registered bond dealers. There is no way to buy these bonds online, so you’ll have to go to their office and fill out a paper form.
What is the procedure for purchasing Section 54EC bonds?
What is the procedure for purchasing bonds under Section 54ec? If you want to invest in 54EC bonds, you can do so through your broker. If you want to buy something, you must do it within six months of the asset being transferred. The minimum investment is Rs 10,000, with a maximum of Rs 50 lakhs.
NHAI or REC: which bond is better?
REC bonds have a somewhat higher rating than NHAI bonds. Because NHAI bondholders must request for surrender of bonds at maturity, which is after 5 years, and only then is the maturity amount redeemed and paid by cheque or ECS. It will be automatically redeemed and paid by check or ECS in the case of REC bonds.
Are NRIs allowed to invest in NHAI bonds?
From FY 20-21, NRIs would be able to invest in 5-, 10-, and 30-year bonds. RBI has the authority to establish new guidelines at any moment. NRIs can consider investing in the following categories of bonds:
Public Sector Units and Capital Bonds
The investors do not receive any tax benefits from these bonds, but the interest earned is tax-free under section 10 (15) (IV) (h). Under Section 54 EC, NRIs can claim deductions by investing in Capital Gain Bonds issued by REC and NHAI. There is a three-year lock-in term on these bonds.
Non-Convertible Debentures (NCDs)
NCDs are a type of corporate bond that can be redeemed and traded. They are debt securities that can be used as a long-term investment. The maturity time varies between one and twenty years.
Debt Mutual Funds
Fixed interest can be earned through debt mutual funds. After submitting their FATCA declaration, NRIs are permitted to invest in mutual funds. After deducting funds from an NRE or NRO account, the investment will be made.
Bharat Bond ETF & FOF
Securities from India NRIs are more interested in the Bharat bond ETF and FOF since they are safe, low-cost, and give superior returns. The Bharat Bond ETF blends maturity with the advantages of an exchange-traded fund.
What is the procedure for purchasing NHAI tax-free bonds?
What is the procedure for purchasing NHAI bonds?
- Make a check or demand draft in the name of the “National Highway Authority of India” with the words “Account payee only” struck off.
Is the interest on NHAI bonds taxed?
“For any due date between March 20 and September 29, the finance ministry has prolonged it to September 30 due to the Covid 19 pandemic,” said Prakash Hegde, a chartered accountant in Bengaluru. For example, if you sold your home on December 15th and your 6-month due date was in mid-June, your payment would be delayed until September 30th. The bond interest is taxed at your slab rate. The bonds have a 5-year lock-in duration.