54EC bonds on Zerodha

Section 54EC bonds (REC, PFC, NHAI) allow investors to claim exemption from LTCG on land/building sale by investing the gains in these bonds within 6 months.

Key features

• Tenor: 5 years (locked-in).
• Coupon: ~5.25% (subject to current issue terms).
• Maximum: Rs 50 lakh per FY.
• Eligibility: Only LTCG from sale of land / building.
• Issuers: REC Limited, Power Finance Corporation (PFC), NHAI.

How to invest via Zerodha

1. Sell land / building, realising LTCG.
2. Within 6 months of sale: Invest gain in 54EC bonds via Zerodha bonds platform.
3. Submit Form ITR claiming Section 54EC exemption.
4. Hold for 5 years.

Compliance

• Investment within 6 months of asset sale.
• Maximum Rs 50 lakh per FY.
• Maximum Rs 50 lakh across two FYs (for sales near year-end).
• Lock-in 5 years.
• Premature withdrawal forfeits the exemption.

Tax on coupons

Coupons taxed at slab rate as interest income.

When 54EC vs Section 54F vs reinvestment

For complex tax planning, consult a Chartered Accountant before investing.

See also

• Corporate bonds on Zerodha
• Tax-free bonds on Zerodha
• Zerodha bonds platform
• Capital gains tax in India
• Section 54EC bonds
• Bond YTM calculator
• Bond interest accrual on Zerodha
• Bonds / NCDs on Kite
• Pledge covered bonds on Zerodha
• RBI Retail Direct vs Zerodha bonds
• Zerodha vs GoldenPi bonds
• Government Securities (G-Secs) on Zerodha
• Buy G-Sec on Zerodha
• Buy T-Bills on Zerodha
• Buy SDL on Zerodha
• G-Sec taxes on Zerodha
• Bid for SGBs at primary issuance
• SGB tax treatment on Zerodha
• SGB redemption on Zerodha
• SDL vs T-Bills vs G-Secs comparison
• Calculate G-Sec returns
• Section 54
• Section 54F
• Long-term capital gain
• REC Limited
• Power Finance Corporation
• NHAI
• Income Tax Act
• Zerodha

External references

• Zerodha bonds
• REC Limited
• PFC
• Income Tax Department

References

1. Income Tax Act 1961, Section 54EC.
2. CBDT, 54EC bond eligibility circular, incometax.gov.in.
3. Zerodha, 54EC bonds, zerodha.com/bonds/.