What are Capital Gain Bonds? And How to invest in it?

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What are Capital Gain Bonds? And How to invest in it?

Capital Gain Bonds (54EC Bonds)
While not strictly a sub category of debt, these are bonds that relevant to Real Estate investors as they are a way to gain some respite from capital gains taxes.

When you sell a real estate property, say a house, you are subject to capital gains tax. To avoid this tax, you can go for capital gain bonds.

Do note, we will not go in depth into the exact details of how capital gains works in case of property but this section applies on all the gains after brokerage, indexation, expenses, etc are subtracted from the sale price. Consider this capital gains amount as X. We need to pay capital gains tax on this amount X.

To avoid paying tax, this final capital gains amount X, can be invested in these 54EC bonds as a way to avoid the tax burden.

To be eligible for this exemption there are three key requirements
• The amount you invest should be sourced from the gains you have from the sale of property
• The amount should not exceed 50 lakhs for individuals or 50L per partner in a real estate business
• Investment shall be made within 6 months of date of sale or filing of your IT return

Currently, three companies issue bonds under this category and you can invest in them through your bank.
• REC (Rural Electrification Corporation Ltd)
• PFC (Power Finance Corporation Ltd)
• NHAI (National Highways Authority of India)

The key details to note about these bonds are
• As of today, all 54EC bonds are AAA rated PSUs (which are partially divested by the Government)
• TDS is not deducted on interest from 54EC bonds and they are exempt from Wealth Taxes
• They are issued with a lock-in period of 5 years
• Minimum investment in 54EC bonds is 1 bond amounting to ₹10,000

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To keep all these simple, we used our “Investment Alerts” telegram channel. We just followed the alerts triggered in the channel to go and invest on the go. There was no need to any manual calculations or waiting. We will just blindly follow whatever that’s mentioned in the Alerts triggered.

As per the request of subscribers, we have created a separate channel for generating automated alerts for investments. Please use the below link to join InvestmentAlerts Channel in Telegram.

When the market was crashing in Jan-March 2020, we have released a video on how to invest during market crash and it worked beautifully. Though we couldn’t invest all the cash we have saved for investing in crash, the amount we invested using the strategy have really boosted the portfolio.

One year later, market is hitting record highs everyday and I was flooded with questions on how to invest in this raising market. So I have shared a video on personal investment approach for this scenario as well..

How to invest when market hist new lifetime high everyday?

Our 3 year old video on impending stock market crash of 2019-2020:

Also, if you want to have quick check on these Nifty levels and how much market has fallen from the peek, you can check our website. It has a live feed.

InvestmentAlerts Channel will generate automatic alerts based on my investment strategy explained in these videos and sends reminder whenever the investment opportunity is available. Also, the message will include how much i should invest as well.
This almost entirely automates my investment strategy and helps me to stay clear of noise.

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